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Outlook for solar photovoltaics in 2009!
Friends and dear readers, this is my last blog post for 2008! Indeed, what a year this has been!!
Let me bid this year goodbye with a general outlook on the global solar photovoltaics industry for 2009.
iSuppli had recently put out a report on solar eclipse coming in 2009! I had blogged about the possible solar sunburn ahead, as well, earlier last week!
Another point that has interested me is: what happens to the top 20 global solar photovoltaic companies, based on iSuppli’s analysis! This blog post has perhaps been the most popular in recent times.
I was very lucky to re-associate with Dr. Henning Wicht, Senior Director, Principal Analyst, iSuppli Deutschland GmbH, in Munich, Germany, for this discussion, thanks to the efforts of Jon Cassell and Debra Jaramilla!
How bad is solar?
The first and the most obvious question: how bad is the global solar market right now and why?
According to iSuppli, bringing an end to eight consecutive years of growth, global revenue for photovoltaic (PV), panels is likely to plunge by nearly 20 percent in 2009, as a massive oversupply causes prices to drop!
Worldwide revenue from shipments of panels will decline to $12.9 billion in 2009, down 19.1 percent from $15.9 billion in 2008. A drop of this magnitude has not occurred in the last 10 years and likely has not happened in the entire history of the solar industry.
Dr. Henning Wicht says that the upstream part of the solar business (cell, module, etc.) will suffer from price decline due to strong oversupply. The downstream side will benefit (installation, end-user, investor, etc.) by lower system prices.
Therefore, what can the solar players do to get over this coming bad phase in 2009? Well, three things: improve the cost structure, improve the sales side, and diversify downstream… These points hold strong for all fully integrated and non-integrated solar panel suppliers as well. By the way, fully integrated solar panel suppliers are likely to suffer less severe losses than non-integrated competitors.
There must be some way around to to bring about some balance within the current imbalance in the demand and supply situation. While Dr. Wicht agrees this is a difficult one to answer this early, he adds that supply and demand are diverging heavily. “With the current trajectories even in 2012, 100 percent more modules are produced than installed,” he says. I promise to discuss this question again with the good Dr. in another six months time.
Word of wisdom
There are various support programs in place, and it is important to know whether they will continue to remain beneficial, both to support markets to become independent sustainable and to develop the regional industry.
Dr. Wicht believes the support programs are still required and beneficial. “If China, India, Mexico and other sunny regions would start to support solar installations, that could change the picture drastically,” he notes.
A note of warning for new entrants in the solar photovoltaic space! Be aware that this warning has been earlier highlighted in the global semiconductor outlook for 2009! In tune with what the various analysts have maintained earlier, iSuppli also forsees newcomers in the solar photovoltaic line having problems in getting the required credit for their projects.
What next for Europe, emerging regions?
According to iSuppli, the short-term boost in demand from Spain and Germany has kept the installation companies busy, and solar orders and module prices high. But this boom is over. So, what’s next for European players?
According to Dr. Wicht, Germany and Spain should continue their leading role as solar installation regions, even after the boom. France, Italy and Czech Republic are attractive, but still much smaller markets, he maintains.
iSuppli has also mentioned that the race to larger manufacturing scale comes to an end when the production is not sold anymore! In that case, what’s the case for the emerging nations, like China and India? Aren’t there buyers in such places?
Dr. Wicht says: “Demand in the traditional solar markets is not elastic enough to absorb all of the solar production. Potential new markets, for example, China and India, do not yet have installation capacities and administration to significantly change the global solar demand short term.”
iSuppli also feels that the newer Chinese and Taiwanese suppliers will be hit particularly hard during 2009. The reason being, many suppliers have expanded their production capacities heavily without securing equally the sales/downstream part.
Global top 20 rankings to change?
Now to the most interesting part! Most of you have read about the top 20 global solar photovoltaic suppliers. Following the iSuppli warning of a ‘solar eclipse’ in 2009, there is every likelihood that there will be changes in that table!
Dr. Wicht adds, “However, the top 10 companies are typically better placed than the competition regarding their cost structures, downstream integration and vertical integration.”
Obama’s solar plans!
Now on to yet other interesting point! The US President-elect, Barack Obama’s, New Energy for America plan could well have a significant impact on the US solar industry.
The plan’s provisions include:
• A federal renewable portfolio standard (RPS) that requires 10 percent of electricity consumed in the US to come from renewable sources by 2012.
• A $150 billion investment over 10 years in research, technology demonstration and commercial deployment of clean energy technology.
• Extension of production tax credits for five years to encourage renewable energy production.
• A cap-and-trade system of carbon credits to provide an incentive for businesses to reduce greenhouse gas emissions.
Dr. Wicht says: “We all know that Obama is in favor of renewable energy. However, he will not change a 160 percent oversupply of solar panels in 2009.”
Bumpy ride to grid parity?
On another note, and a pretty favorite one: Is it going to be a “bumpy road” to grid parity? How will the subsidies be kept going?
Dr. Wicht notes: “Subsidies will continue. It will always be a bumby road because the ramping cycles differ heavily among silicon, cells, modules and the installation capacity. Please remember that the installation business will now benefit from low module prices. It will recover some of the margins it has lost in the last years due to high module prices.”
Also, up to when will polysilicon constraints last? iSuppli had earlier indicated PV strategy changes. According to Dr. Wicht, the polysilicon prices are coming down already. “Our indication from October 2008 seems to be fairly good,” he says.
Lastly, will iSuppli be still sticking by solar, semicon investments being equal by 2010?
Dr. Wicht says: “Please let me cite again our interview in October: The investments for solar production raising up to several hundreds of Mio USD, up to 1 Bio $ per production site. That is coming close to a semiconductor fab. The total capex of semiconductor is still 10 times larger than PV. However, PV is rising much faster.”
That will be all for this year, folks!
Look forward to sharing much more captivating moments in semiconductors, electronics, solar photovoltaics, telecom, etc., in 2009!
Wishing all of you a very happy, prospe
rous and successful 2009. Be safe and look after yourself! See you next year!! 🙂
Altera on FPGAs outlook for 2009
Hardly any segment of the global semiconductor industry has escaped the economic financial crisis! Nevertheless, as the year draws to a close, several segments are planning strategies for tackling what could well be a difficult 2009! FPGAs are no exception!
Jennifer Lo, Senior Marketing Manager, Altera Asia Pacific, agrees. Highlighting the impact, as per reports in the media, the economical environment we are getting into is extremely challenging. Recently, Gartner lowered its 2009 semiconductor forecast to ‘down 16 percent’ as compared to 2008.
Altera placed strongly
Lo says that compared to the other semiconductor companies, many of whom are taking very drastic measures in cutting down costs and preserving capital, Altera is in a very strong position, both financially and product-wise.
Financially, Altera is said to have taken steps to focus on cost reductions and simplification internally, a few years ago. The company is seeing great results from those efforts. “You may check our financial data and find that we are essentially debt-free and have very healthy balance sheet. We continue to be profitable even under the very challenging environment we are in,” Lo contends.
Product-wise, Altera announced a few days ago that it is shipping the industry’s 40nm product, considered a key milestone. “We are very excited about it with this new product family, Stratix IV, which offers the industry’s largest density, highest performance, highest system bandwidth and lowest power, targeting customers in a variety of markets, including communications, broadcast, test, medical and military,” she says.
Going forward in 2009, Altera will continue to rollout the rest of the members in the Stratix IV product family. It will also continue to execute new product strategies in the plan with full confidence.
Tackling demand weakness in FPGAs
There have been whispers regarding demand weakness in the FPGA industry. On the contrary, Lo adds that lower power, lower cost and smaller space are still common needs for portable applications for 2009. These needs may drive PLD vendors to focus on architecture and process to address power and cost. Also, work on package to develop a smaller device. Altera’s goal is to still focus on these common needs.
The Altera MAX II Z already offers the lowest dynamic power and comparable static power in industry already. The company may focus more on package size on 2009.
Although leading-edge FPGAs are scaling to 40nm and beyond, have the tools caught up with these new and complex processes? She says that lowering power consumption and improving customer productivity have been the focus of Altera’s product strategies for the past few years.
Lo adds: “Lowering power consumption means lowering costs for customers, not only in the BOM cost (reducing heatsink or cooling requirement), but also the ongoing operating cost (fans, air-conditioning costs,…etc). At this day and age of ever increasing fuel and electricity costs, this is gaining significance in customers’ selection consideration. Seeing such a need, reducing device power consumption has been a major element in the company’s product planning and execution.”
Altera’s Max II Z product in the low-cost CPLD line offers the lowest dynamic power and static power in the industry that is catered for the portable applications. On the high end of the spectrum, with Stratix IV GX, for example, with the advanced 40nm process node, Altera utilizes the ‘Strained Silicon’ technology, lower core voltage of 0.9V, triple gate oxide, as well as low-K inter-metal dielectric material low power transceiver designs.
“In terms of design, we put in extra effort in lowering the overall power consumption in the transceivers as well as optimized DDR memory interfaces,” she notes.
Coupled with programmable power technology, which allows customers to use high performance (hence, high power consumption) circuitry for design along the critical path, while either using low-power circuit on other parts of the design or turning the logic blocks completely off while not in use, all process and design innovations work together toward one common goal of lowering the overall power consumption in the customer design.
Lo says: “In customer productivity improvement, we’ve invested in the feature sets in our design software, Quartus II, to enable team-based designs, incremental compilation, as well as faster compilation time compared to the other competing software. We also have a wide suite of IPs in a multitude of applications and technologies, such as our Nios embedded processors, the many memory interfaces and peripherals. Combining all of those with our SOPCBuilder tool also enables customers to integrate system designs with very much reduced time and effort.”
There have also been some talks lately about FPGA design starts being quite flat over the last couple of years.
Altera sees a lot of new market applications for FPGAs, apart from the traditional communications market. Out of the many market segments that it participates in, the company feels that communications, military and industrial segments will be in better situation than others in the next couple of years. Needless to say, Altera will continue to focus on these segments.
Tackling complexity
Tackling complexity is a major focus area for projecting FPGAs as a growth segment for 2009.
Lo says: that as with other previous downturns, the industry may go through its reformation, which may inevitably involve some weaker companies to either go out of business due to deteriorating business environment or get acquired by stronger companies. Altera is very confident that programmable logic, with its highly flexibility, versatile application, will have a good market position in 2009.
The Hardcopy ASIC is said to have been Altera’s major differentiator from the other PLD/FPGA vendors.
“We are the only company having both an FPGA vehicle to enable fast time-to-market and simultaneously possessing the seamless migration platform to low-cost production support using Hardcopy ASIC. With the industry trend of fewer and fewer ASIC starts due to the high NRE costs and high justifying volume, there will also be less investment in the ASSP front given the contracting demand. We see Hardcopy as a major competitive edge that will us bring to a different rank in the industry,” she notes.
Indeed, it is good to see companies thinking very hard about tackling a difficult 2009! There’s lot of fight left, and it’s not that semiconductor companies haven’t faced downturns earlier. Keep the faith and allow these folks to come up tops again!
Why solar/PV is good for India? An ISA perspective!
Recently, the India Semiconductor Association (ISA) held an educative briefing session on the potential of the solar PV market in India, which was conducted by Rajiv Jain, Director, Government Relations, ISA.
This meeting was held well before iSuppli issued a warning that there could be global solar sunburn in 2009! I am sincerely hoping that most of the points mentioned by ISA’s Jain still hold good in the coming year, and that India really does well and takes off in solar photovoltaics.
The ISA’s vision: To help make India an attractive global destination for PV manufacturing and a world leader in solar energy.
Starting with the basics of photovoltaics, he said that it is a package of solar cells used to convert energy from sun to electricity. In simpler words, photons from sunlight knock electrons into higher state of energy, thus creating electricity. The electricity can be used to power equipment or recharge a battery. A typical PV system mainly consists of a PV module, battery, inverter, controller and junction box.
Focusing on the technological landscape, he touched upon the two key technologies for solar: crystalline and thin film.
Crystalline silicon is said to be the most mature Si wafer technology, with the largest market share. Though, high on cost, it has a typical efficieny of 14-18 percent. Crystalline silicon is said to suitable for rooftop applications.
Thin film is nothing but thin layers of photosensitive materials on glass. It is currently on high growth due to silicon shortage, and very low on cost due to low material consumption. The efficiency is about 6.5-8 percent.
A third technology, nanotechnology, is the future technology for cost reduction. It is more in the R&D space as of now.
Present scenario for solar
So what’s the present scenario? In 2007, of $71 billion invested in new renewable energy (RE) capacity globally, 30 percent was in solar PV. It is the fastest growing area in the energy sector, with a CAGR of 47 percent over the last five years.
Grid-connected solar PV has been high growth market segment in 2007 (50 percent increase). Also, 86 percent of the PV installations are largely in four countries, with Germany at 47 percent being the outright leader.
Market drivers are said to be attractive feed-in tariffs, national PV market development and acceptance, RE obligations through solar PV, access to cheaper mode of finance, manufacturing incentives as well as strong R&D.
Why solar for India
I have addressed this in an earlier blog post. Here’s what Jain had to say, and it is mostly in line with the earlier discussions.
First, India has among the highest solar irradiance globally. It also has the best quality reserves of silica in Orissa and Andhra Pradesh. India has also established itself low cost producer and assembler of solar PV cells and modules.
The major challenges include attaining scale and integration for cost reduction, and, R&D for development of the industry.
Solar insolation in India
To start with, the daily average solar energy incident varies from 4-7kWh per m2. Next, we have multiple sites with solar irradiation >2000 hours per year. In contrast, Germany has 900-1,200 hours per year. Further, most parts of India have 300-300 sunny days in a year translating into a potential of 600GW. Also, potential in some states like Rajasthan is 35-40 MW per m2.
It is well known that the Indian semiconductor policy of 2007 has triggered off the now well publicized efforts in solar initiatives. The government of India has received 16 applications with investments envisaged at app Rs. 1,55,000 crores.
The investments in solar PV manufacturing exceed Rs 1,25,000 crores. Generation based incentives (GBI) are going to be key.
Potential market segments in India
There are quite a few, actually. In rural electrification, the government of India’s target is to achieve ‘Electricity for all by 2012’. About 18,000 remote villages will likely be electrified through RE. About ~25 percent of the remote villages, i.e., 4,500 villages, form a very viable market.
Next comes telecom back-up power! PV is a cost effective alternative to diesel generators (DG) for back up power for shorter duration, as DG based systems suffer from several disadvantages.
Another key market could be grid connected solar PV based generation. Current tariffs do not provide attractive IRR to developers. Decreasing system prices are however, likely to improve the economics.
Finally, roof based BIPV is said to be an alternative to reduce the cost of power procured by commercial buildings.
ISA’s recommendations
The ISA has also made salient recommendations via its report on the industry. These include areas such as manufacturing: with an aim to encourage companies investing in ‘Scale and integration’, provision of capital subsidy to larger number of units, availability of funds at a cheaper rate, and an emphasis on R&D.
Also, the ISA has recommended that GBI be given for a tenure of 20 years, with the present period being 10 years. Further, it has suggested an accelerated depreciation along with the GBI scheme, and the availability of GBI for an unlimited capacity for a period of five years. The ISA has recommended an enactment of the RE Law requiring utilities to progressively increase power purchase from RE.
On its part, the ISA has been working with the government of India and various state governments as well. It has a sound rapport with concerned ministries – MNRE, DIT and NMCC.
The ISA has also assisted in the technical evaluation of solar PV proposals received in Fab City, Hyderabad. It has also drafted a semiconductor policy for the government of Karnataka, which should be out early next year, hopefully. The ISA is also working with several other state governments to promote the industry in their states.
The second ISA Solar PV Conclave is scheduled for November 2009 at Hyderabad.
Very good intentions, all of these! Now, for the Indian industry and the government to deliver, and walk hand in hand!!
Rapidly growing local market bring new opportunities for EDA in India
Those following the EDA industry are well aware that its been an industry in some trouble right through this year.
If you visited EDA Consortium’s web site, this becomes clear. In Q1-08, the global EDA industry revenue for Q1 2008 declined 1.2 percent to $1,350.7 million compared to $1,366.8 million in Q1 2007.
Later, the EDA industry revenue for Q2 2008 declined 3.7 percent to $1357.4 million compared to $1408.8 million in Q2 2007, as reported by the EDA Consortium.
I am still waiting to see how the Q3 results shape up. My guess is, it would be even lower than Q2, unless there are a few surprises!
The EDA market in India, as per the ISA F&S Report 2005, was US$110m. The latest figures are not yet available, though I would believe the Indian EDA industry is likely to do better than the global industry, unless, there have been some slowdown effects here as well.
I had an interesting discussion with Jaswinder Ahuja, Corporate Vice President and Managing Director, Cadence Design Systems (I) Pvt. Ltd and Chairman, India Semiconductor Association (ISA), on the (dipping?) fortunes of the EDA industry lately.
According to Ahuja, 2008 has been a challenging year. The global financial crisis has impacted several industries and the EDA industry was no exception. Due to the overall downturn in the economy, companies are being more cautious and are delaying purchase decisions, a move that is impacting the overall EDA industry.
Coming to the drivers for EDA in India this year, there are a few key ones! First, the design centres have gained expertise and are now doing cutting-edge designs out of India. They have moved up the value chain from doing block-level design to increasingly owning up end-to-end design and design starts.
Second, several Indian design services companies have made significant acquisitions, showing that their businesses have not just taken root, but also flourished. MindTree Consulting’s acquisition of TES PV and Wipro’s acquisition of Oki’s wireless chip design arm are cases in point, added Ahuja.
He said: “The Indian EDA industry has been growing and we will see more technology adoptions and proliferations in India Design Centers. Also, the rapidly growing local market is unfolding new opportunities.”
EDA outlook 2009
Going forward, market pressures and design complexities are just some of the issues design teams face today. Cadence’s customers, for instance, would like to plan in the context of IP selection, run analysis around power, performance and cost perspectives. Design predictability will be a priority, said Ahuja.
The key focus areas for the EDA industry will be new design for manufacturing technologies as designs move to advanced nodes; verification and verification IPs and multicore processing support for EDA flows as a result of increased integration.
Also, SaaS is likely to gain traction as companies are compelled to consider flexible engagement models to access state-of-the art design environments that help design teams reduce risk and cost, yet increase time-to-productivity.
Are there any opportunities for EDA folks in solar? Ahuja disclosed that in a recent poll by ISA, to the question ‘Solar PV has potential in India’, almost 90 percent of respondents replied Agree or Strongly Agree.
With the worldwide focus on alternative energy systems, India has witnessed several companies announcing investments in PV segment. This is good news for the Indian semiconductor ecosystem.
Cadence has a broad portfolio of technologies that addresses the needs of different players in the ecosystem.
Low power initiatives
Low power has always been a key focus area in semiconductors. According to Ahuja, power efficient design is gaining importance across the design chain and EDA companies will have to look closely at ‘green’ technologies.
Energy efficiency at the system and application level for wired and wireless products will be one of the focus areas. Emerging technologies that allow applications and systems developers to evaluate how their programs use power both individually and in a dynamic, multi-application model of the end system will help expand the role of EDA into system-level design.
The Power Forward Initiative (PFI), an industry alliance comprising of companies across the semiconductor design chain will work towards a more systematic, integrated approach to low-power design.
Outlook 2009
With the new year about to start in less than a week’s time, the impact of the financial crisis will see an increased demand for mid-range product technology as consumers shift spend toward ‘essential’, rather than ‘desirable’ electronic products.
As per Ahuja, globally, semiconductor companies are focusing on their core strengths, consolidating and realigning resources. Across sectors, they will look for systems that marry functionality with cost efficiencies.
“Growth for semiconductor companies will come from energy related and low-power technologies that are able to drive market share shifts,” he noted.
DRAM makers being offered lifelines via bail out plans!
Browsing the Web these past days has brought me to various stories, mostly discussing the various bail out plans being provided for some leading DRAM makers.
It all started with Germany based Qimonda announcing that it has arranged a Euro 325 million financing package for the ramp up of its innovative Buried Wordline technology.
Yesterday, Hynix, the Korean DRAM maker, received a bail out of $597 million, according to reports on Fabtech. The story also reports that Powerchip Semiconductor, Taiwan’s largest DRAM maker, is also seeking new funding.
Then, DigiTimes, a very good technology news Web site from Taiwan, reported yesterday that Taiwan’s Ministry of Economic Affairs (MoEA) had reportedly developed an NT$200 billion (US $6.5 billion) bail out plan for Taiwan’s hard-hit DRAM makers.
Sitting in India makes it a little difficult to speak with global companies based in Taiwan, Korea and Germany. I sometimes wish I could get some help from reliable sources as to what’s the actual ground situation.
Having said that, it is good to see various national governments showing their deep concern about the state of the global DRAM industry and about technologies. And, let us keep all criticisms aside, as to who performed and who didn’t! Here’s a lesson for India to learn from, as closer home, it has a semiconductor industry really in its infancy!
Right now, the global semiconductor industry is facing a downturn and memory is the hardest hit! Hence, if any measures are being taken to somehow bring DRAM back on track, it should be welcomed.
Qimonda, Hynix, Powerchip, etc., are not small names in the global industry. Poor performance from memory players saw them dropping out of the top 20 global semiconductor players’ rankings in 2008.
All the lifelines being provided to these major players now means that these companies need to pull it off, somehow, and extricate themselves from the depths they have fallen into. If they fail, they will perish! And, they all know that!!
I’d be very keen to see the responses of DRAMeXchange and iSuppli on these bail out plans.
Merry X’mas everyone, and hope you all have a great time!
PS: I have iSuppli’s feedback!
Speaking on the Taiwan government’s bail-out plan as well as Hynix’s rescue package from banks, John Lei, Analyst, memory, iSuppli Corp., said: “In general, Hynix’s package is much like a short-term relief for their near-term debt, while the Taiwan government aims at the possible consolidation of five suppliers.”
“All these packages could bring more uncertainties to the maket, however, based on iSuppli’s assumption and forecasts. The industry operation profit margin will hit bottom in Q4-08, but profitability of the industry will not occur until Q4-09,” he added.
Solar sunburn likely in 2009? India, are you listening?
iSuppli’s just issued a warning that 2009 could well see the coming of a solar market eclipse!
Come to think of it! Just last week, in the Semiconductor International webcast, the analysts did mention that there could be tough times ahead for solar! In fact, Aida Jebens, Senior Economist, VLSI Research Inc., did indicate that solar/PV would pick up in the next two years and that 2009 could be a tough year.
If you look at the India situation, I have been getting the feeling all the time that all of a sudden, too many companies were entering this market segment, as though it is a land of promised gold! Perhaps, it is, and one sincerely wishes that all of those investments proposed for solar do not come unstuck.
This August, following the announcement of the national semiconductor policy (the Special Incentive Package Scheme, or SIPS), the government of India received 12 proposals amounting to a total investment of Rs. 92,915.38 crore. Ten of these proposals were for solar/PV, from: KSK Surya (Rs. 3,211 crore), Lanco Solar (Rs. 12,938 crore), PV Technologies India (Rs. 6,000 crore), Phoenix Solar India (Rs.1,200 crore), Reliance Industries (Rs.11,631 crore), Signet Solar (Rs. 9,672 crore), Solar Semiconductor (Rs.11,821 crore), TF Solar Power (Rs. 2,348 crore), Tata BP Solar India (Rs. 1,692.80 crore), and Titan Energy System (Rs. 5,880.58 crore).
Then, late September, Vavasi Telegence (Rs. 39,000 crore), EPV Solar (Rs. 4,000 crore), and Lanco Solar (Rs. 12,938 crore), also announced major investments.
Now, given the quite ruthless kind of financial crisis the world is currently engulfed in, several have raised doubts whether solar players would be able to get the credit they need. Or, would they run into rough weather?
On paper, some of these companies are big corporate houses, with several years of standing. However, reality can be quite different, and can bite! I’ve yet to hear whether all of these companies have managed to raise the requisite capital. One sure wishes that they have all been busy and will be successful!
Otherwise, all one needs to look at is iSuppli’s warning. According to iSuppli, ‘Bringing an end to eight consecutive years of growth, global revenue for photovoltaic (PV), panels is expected to plunge by nearly 20 percent in 2009, as a massive oversupply causes prices to drop.’
Will it be a case of massive oversupply in India? We haven’t exactly started. Hence, perhaps, we will come to deal with oversupply later. The key thing is to get all of these solar/PV projects off the ground!
The India Semiconductor Association (ISA), and now, SEMI India, have been promoting the solar/PV industry very aggressively. The work they’ve done so far has been commendable, and I’ve been witness to all of their activities. However, keep in mind that these are only industry associations, who can only advice, guide, debate and promote the industry, and also provide industry statistics for everyone to consume.
The real action can only happen once the proposals have been cleared by the Indian government and the players have managed to arrange for the requisite capital for their projects. The Indian fab story with SemIndia is all to familiar, and there should not be a repitition with solar/PV projects.
Therefore, the role of the government of India will be extremely critical and crucial. The good health of the Indian solar/PV industry is entirely in its hands, and not in the hands of the industry associations.
Perhaps, the Indian government could do well to look at how the Taiwan government is playing a critical role in reviving the hard hit DRAM industry and also at the German free state of Saxony, which has played a key role in financing the ailing Qimonda.
Otherwise, the Indian solar/PV industry could get hit, even before it takes off the ground! And, as a nation, we cannot afford that to happen!
India has so far has had a good story going in solar. There are hopes that solar/PV will trigger off a spate of manufacturing activities in India, besides creating lots of jobs. Don’t think we can afford to spoil all of this!
The industry in India is still very much in its infancy. Let the baby play happily in the water (solar) tub, instead of throwing the water out! This baby needs a lot of hand-holding to get stronger in the years to come.
Semicon outlook 2009: Global market could be down 7pc or more
Friends, I’ve just got off a very interesting, but predictable, webcast on the outlook for the global semiconductor industry organized by Semiconductor International.
The news coming out of this webcast is not very good for the industry. And as the moderator commented toward the end, I’d say too, “I hope these guys are all terribly wrong!”
All of the experts, as listed below, have predicted a dismal 2009 for the global semiconductor industry, starting from a negative 7 percent or more!
For everyone’s information, the participating experts at the webcast were:
* Moshe Handelsman, President, Advanced Forecasting Inc.
* Aida Jebens, Senior Economist, VLSI Research Inc.
* Carl Johnson, Executive Director, Research Infrastructure.
* Dale Ford, Senior Vice President, Market Intelligence, iSuppli Corp.
* Lara Chamness, Senior Market Analyst, Industry Research and Statistics, SEMI.
So, the key question: What is the global semiconductor industry going to look like in 2009?
Semicon -7pc down in 2009 or more?
VLSI Research’s Aida Jebens said that they are pegging electronics as either flat or negative for 2009. The semiconductor market would be down 7 percent as well. It could be worse, she added, depending on how the November and December 2008 numbers come out to be!
iSuppli’s Dale Ford was cautious, given that the firm has not yet announced its forecast publicly. (I’ve discussed the industry at length earlier, with Dale Ford.) As for guidance, he said that iSuppli sees the electronic equipment market declining roughly in the 1pc range.
With regard to semiconductors, iSuppli had given some interim guidance with the industry turning down 9.4 percent. He added that in iSuppli’s final forecast, it could be more negative, although, not double digit negative. However, he added, “We do see growth coming down nearly to that range.”
Handelsman from Advanced Forecasting, added that while his company’s policy was not to divulge the exact numbers, except to their clients, he provided insights that there will be decline for ICs in revenues, which will be larger than 2008. Regarding equipment, the decline will be significantly larger than what other sources believe it will be. This is quite discouraging, folks!
Research Infrastructure’s Carl Johnson, while calling numbers as a moving target, provided some guidance as well. According to him, the electronics equipment sales will be down, close to 10 percent.
Even the IC sales will be down, close to the 15 percent range. In the capital equipment business, the numbers are not going to be good either. Johnson said that it could probably be at least a 30 percent decline in 2009. There are also chances that the industry might even approach the numbers that it reached during the downturns in the mid nineties!
Finally, SEMI’s Lara Chamness, closed in on the outlook for semiconductor equipment and materials. According to her, for semiconductor equipment, 2009 will definitely be a negative year, somewhere around -22 percent! For semiconductor materials, SEMI is looking at -1 percent decline in 2009.
Tough times ahead for solar?
There’s a bit more than this to add in this blog, especially on the analysts take on solar.
Maybe, those investing in solar, in India, need to see this as well, and take all of the necessary steps, if required. With the kind of financial crisis that we are currently in, people are definitely going to have problems getting credit.
According to VLSI Research’s Aida Jebens, there could be a tough time for solar in 2009. It will pick up, but not in the next two years.
Right then folks, that’s all for now! You have seen the numbers that will matter! I shall try and update this outlook 2009 report on semiconductors sometime later!
How Taiwan government reacts to DRAM turmoil is a lesson in itself!
Taiwan based DRAMeXchange recently sent me a release, which discussed in length the steps the Taiwan government is taking in an attempt to “save one of the ‘2 trillion twin stars’, the DRAM industry”. The Taiwanese Ministry of Economic Affairs (MoEA) was designated to draft the policies, principals, strategic goals and strategic directions of the DRAM industry rescue plan.
According to DRAMeXchange: At 6 PM, December 16, the Taiwanese Ministry of Economic Affairs held a press conference about the DRAM rescue plan, emphasized in the past 10 years the investment amount of the DRAM industry surpassed NT$ 850 billion, and created a complete industry supply chain, which widely covers upstream chip makers, to downstream packaging and testing companies, and module houses. If the recession brought down the industry, the Taiwan industrial chain will be affected severely.
The Taiwanese government showed sincerity and willingness, and hoped that Taiwanese DRAM vendors can actively start to consolidate horizontally and vertically, and make joint proposing plans to the government. The government will not take the leading position, but the strategic direction is long term integration, which is not just merger but also includes cooperation of co-research, co-develop, and co-manufacturing.
The government also emphasized that it will tend to strengthen the relationship among the co-operation of Taiwanese, American, and Japanese DRAM vendors.
In another report, Gartner has gone as far as dubbing the DRAM industry as the wild card for the semiconductor industry in 2009! The DRAM industry has been in a downturn for the past 18 months and losses are now approaching $12 billion, it says.
How the Taiwanese DRAM industry reacts to the efforts of the Taiwan government will be visible in the coming months. Among other bail out plans, the Taiwan government has also focused on the need for the local industry to develop its own technology.
Taiwan takes great pride in having been a leader in technology and R&D for long. If the DRAM industry does not recover quickly enough, it would indeed impact the country’s industrial chain as well.
What’s interesting to note is the key role the government of Taiwan is playing in all of this. It again stresses the importance of government contribution within the semiconductor industry. And, there is also a lesson in all of this for India!
Closer home, in India, I am (and I am sure, interested readers and parties are too) still waiting to hear on what happened to the several proposals that were received for solar/PV, as well as on the various state policies, especially, Karnataka.
All believe that these would surely get pushed through in the new year. However, there is a need to show some speed in this regard as well. You cannot afford to wait for too long in the semiconductor industry. The SemIndia fab story is all to well known and hopefully, still fresh in everyone’s minds.
NXP India's Rajeev Mehtani on top trends in global/Indian electronics and semicon!
When a new year approaches, we start analyzing the year gone by and try to gauge what could happen in the coming year. This really holds true, as far as the technology industry is concerned.
It’s been a week since I’ve been mulling over these myself, especially, pondering over developments in the global semiconductor and electronics industries, as well as what could happen in India during 2009. Well, lots will happen, and I can’t wait for the new year to start!
I caught up with Rajeev Mehtani, vice president and managing director, NXP Semiconductors, India, and discussed in depth about the trends for 2009. Here’s a look at that discussion.
INDIA — ELECTRONICS & SEMICONDUCTORS
1. The DTH story will continue to increase in India with companies such as Tata Sky, DISH TV, BIG TV, etc., gaining market share. Owing to these challenges, there would be significant consolidation among the cable operators. Digitalization will also be seen in 2009.
2. The slowdown will affect growth across all sectors. Our view is that LCD TVs as well as STBs will continue to grow.
3. The year 2009 will witness e-commerce revolution and the RFID sector will grow at a 40-50 percent clip. The government has been sponsoring a lot of projects, which include RFID in the metros, e-passport cards and national ID cards. By mid-2009, we can expect a mass deployment of these projects as well as micro payments.
4. Manufacturing in India will continue to grow; EMS or OEMs, such as Samsung, Nokia, Flextronics, etc.
5. There could be a move from services to products in electronics and semiconductor spaces. The number of funded startups has grown significantly over the last years and more and more ideas are coming on the table.
6. The solar/PV sector will grow in India. High entry cost of capital for panels will be a barrier for this sector. Government enhancement is necessary. India will be different than other countries as people won’t push energy back into the grid; it will be used more for household consumption. The India grid is unstable. Tracking it requires a lot of expensive electronic switching. Solar deployment could be at the micro level, and also community level, where it makes more sense.
7. The startups in India are mostly Web 2.0 based, although there aren’t many hardware startups.
GLOBAL — ELECTRONICS & SEMICONDUCTORS
1. The semiconductor industry is truly global, That is mostly because it is a very expensive industry.
2. Things are a bit murky in the semiconductor industry. It would probably be dipping 10-15 percent next year.
3. Globally, energy management and home automation will start to take off in 2009. Satellite broadcasters will also continue to gain more strength.
4. On a worldwide scale, 3G will win. You will have 3G phones, and you’d add LTE to those. India is slightly different. Only 20 percent of Indian households are ready for broadband access. In India, WiMAX could be a way to have wireless broadband at home.
5. Industries moving to 300mm fabs will be making up only 20-25pc of the market. Not many need 45nm or 40nm chips. People will question any major capex, until there’s a big return and wait for recession to end. The bright spot is solar!
6. The fabless strategy would be the only way to go forward. While MNCs with fabless strategy are present in India, Indian startups in this space are quite few.
Pradeep Chakraborty 