Wlhat's next in PV equipment?

Thanks to David Jourdan at Yole Développement, Lyon, France, I recently participated in a presentation made by Arnaud Duteil, market analyst, photovoltaic technologies, Yole, titled: PV Equipment – What’s Next? According to Yole’s analyst:

• Until the end of 2008, optimistic demand has pushed industrials to expand their fabsquickly and has thus disconnected capacity from the real market.
• Low average utilization rates are affecting cash flow of numerous players. Initial expansion plans are delayed and cell/module makers are focusing on selling stocks.
• Equipment market has been growing very fast and is now being impacted by this industry slow down. The market will be pushed again in 2010 by a strong restart of PV installations
• Equipment makers have been running after the market for several years. 2009 being a difficult period, they have turn the slowdown into an opportunity to increase their customer support and strengthen their knowledge directly on site.
• The focus is now on process optimization and innovation to continuously drive production costs down.

What’s the current situation?
There has been strong demand in 2007 and 2008, which triggered several fab extensions projects. Also, there were large investment plans across all the value chain — polysilicon, ingot and wafer, cell and module. As a result, at the end of 2008, the industry was big enough to supply:
– 12GWp of solar modules,
– 11GWp of wafers,
– 9 GWP of polysilicon

The equipment market reached 2.7 billion Euros in 2008 and will be down by 30 percent at 1.9 billion Euros. However, two key events changed the market in 2008 — the capping of Spanish incentive program and the global financial crisis.

Yole expects that module demand will reach 6.5GWp at the end of this year and about 5GWp of connected installations assuming 7gr of polysilicon per Wpand 14,5 percent efficiency at the module level.

In 2008, the policy forecast and market reality were not quite matching. There was also strong interest into FIT (feed-in tariffs) and a sturdy demand from the Spanish market led to high module prices. A flat growth has been expected in 2009 mainly because of the 500MW cap on Spanish installations, as well as due to the strong price adjustment.

Strong price elasticity is likely during 2010-11. Strong investments in silicon and cell production capacities will be operational. Also, prices will continue to drop while opening up new markets. In the optimistic scenario, Italy and California could reach grid parity by 2010.

Demand will likely take off in 2012-13. Large raw material availability and factory over-capacities will again force value chain players to lower their cost and reduce margins. Grid parity will be reached in several countries and unmatched demand will emerge.

However, Duteil cautioned that technical bottlenecks are expected on systems storage and electric grid adaptability.

PV equipment market
As for the equipment market, Yole believes that the gap between capacity and demand will negatively impact the equipment market for the next two years.

Assessing the equipment market from 2007 to 2013, in 2007-08, there was strong demand for thin film solution due to expensive polysilicon. It was important for growth of equipment market to match with demand.

In the period 2008-10, there is likely to be strong over-capacity, and low utilization rates are limiting new investments in fab extensions. However companies with proprietary design continue to increase their capacity, such as First Solar. Other examples of companies investing in turnkey solutions: Best Solar, Genesis Energy, KSK Surya PV, Signet Solar, Top Green Energy, etc. From 2011-13, demand for PV installations will trigger new capacities and boost the equipment market.

If turnkey and non-turnkey fabs are compared — a-Si and a-Si/μ-Si new capacity in 2009 — the TF turnkey lines market share is bigger than its C-Si counterpart. This is mainly because the turnkey providers lower technical barriers and thus help in diffusing the technology. Non-turnkey type production capacities will grow, thanks to key companies like First Solar, Solyndra or Abound Solar.

Yole, founded in 1998, is a market research, technology evaluation and strategy consulting company. Forty of its business is in the EU countries, while Asia and North America account for 30 percent each, respectively. Yole is and involved in the following fields:
* MEMS, including microfluidics.
* Photovoltaic, from equipment and materials to cell business.
* Compound semiconductor business (SiC, GaN, AlN, ZnO) –power devices, RF devices, LED, HB LED.
* Advanced packaging (3D IC, TSV, SoC, WLP).
* Nanomaterials.

Strong impact of recession on top 30 MEMS makers

Presenting: The top 30 MEMS (microelectromechanical Systems) suppliers of 2008, thanks to Yole Développement (www.yole.fr), in Lyon, France.

“For the first time, STM is the third MEMS manufacturer worldwide. Overall sales of the top 30 MEMS manufacturers decreased by 2 percent compared to previous year, reaching $5.5 billion,” says Jean-Christophe Eloy, CEO of Yole Développement. The current economic crisis strongly impacts the 2009 edition of the top 30 MEMS manufacturers.

The preliminary top 30 MEMS manufacturers is based on Yole’s market research and expertise covering the MEMS field with more than 2,500 contacts per year. Yole Développement continues to analyze in detail the MEMS market and to follow the Top 30 MEMS manufacturers to deliver the most accurate information available, specifically in these times of big changes.

Major facts in 2008
In 2008, the MEMS market has seen significant changes in the ranking of the top 30 MEMS companies:

* STM has become, for the first time, the 3rd MEMS manufacturer by $ revenue in 2008.
* Delphi and Sanyo are moving out of the TOP 30 MEMS ranking.
* Kionix and IMT are entering the Top 30 MEMS ranking for the first time.
* IMT is again the world leader in the independent MEMS foundry business.
* HP and Texas Instruments, despite decreases in sales, are still numbers 1 and 2 of the top 30 MEMS ranking.

2008 has been a year of unusual movement in the industry:

* The winners: Eighteen (18) companies have shown growth ($ revenue) in 2008 compared to 2007, with Kionix leading the way with 70 percent, and also Measurement Specialties, STM, Panasonic and Murata, to name a few.

* The loosers: Twelve (12) companies have shown a decrease in sales ($ revenue) in 2008 compared to 2007 (in addition to Sanyo and Delphi exiting the top 30 ranking), with FormFactor, Silicon Sensing Systems and Lexmark showing the largest decrease in sales.

Note: The top 30 MEMS Manufacturers graph only considers companies designing and/or processing Si MEMS chips. So, for example, although Sensata is an important sensor manufacturer, its ceramic technology excludes it from the Top 30 ranking.

Economic crisis, specific impact on each MEMS sector
The economic crisis has definitively had an impact on MEMS companies’ financial results, specifically during Q4 2008. However, this impact is very different according to the various MEMS players’ markets. The automotive business is probably the most dramatically impacted by the downturn. In terms of units, it is in the range of -10 percent to -20 percent less compared to previous years.

However, some companies suffer less than others (as is the case for Robert Bosch for example) but all of them are impacted. The impact is also different according to the maturity of MEMS products. Established devices such as airbag accelerometers are suffering more than emerging devices (e.g. TPMS).

The consequences in consumer markets are also different, depending on the MEMS products. Manufacturers of inkjet heads are suffering a lot, with a decrease of about 15 percent IJH production for 2008. On the other hand, inertial MEMS products for the consumer market are still growing (in the range of a several percent) with some players (e.g., STMicroelectronics and ADI) showing pretty good results.

Major MEMS facts to be highlighted in 2008 are:
* Systron Donner Automotive had a very strong decrease because of its automotive business (- 14 percent in US$). This moves it from 10th position in 2007 to 13th in 2008.
* IJH players are dramatically impacted with a decrease in both sales and units (this is the case for HP and Lexmark, the latter undergoing the strongest decrease for IJH). However, HP is still the number one MEMS company for 2008.
* Texas Instruments has seen decrease in its DLP chip sales by about 13 percent (in US$).
* Thanks to its growth of the consumer market, STMicroelectronics’ MEMS business had a profitable 2008 with US$200M for its accelerometer business (twice 2007 sales). This is + 42 percent in euros. STMicroelectronics moves from 4th position in 2007 to 3rd in 2008.

Although it is probably the automotive MEMS player performing the best in 2008, Robert Bosch underwent a -10 percent decrease in euros compared to 2007. Its 8’’ fab is now ready, but production will start only when the economic conditions improve. So, Bosch is moving from 3rd position in 2007 to 4th in 2008.

* Avago has bought the BAW activity of Infineon in Q4 2008, however this sales volume (Yole Développement estimates to be $38 million) has been consolidated into Infineon’s 2008 financial results.
* VTI is suffering because of the automotive market slowdown (- 10 percent in euro).
* Boeringher Ingelheim microParts showed good performance (+ 9 percent in euro), showing that the biomedical market was not impacted by the crisis.
* Panasonic had a very good 2008 with a 10 percent increase in yen compared to 2007.
* Yole believes Panasonic has taken market shares in gyroscopes from Murata and SSS, which show – 4 percent and – 12 percent decreases in yen respectively. Panasonic is now in 16th position (19th in 2007).
* MEAS’s good performance (+ 57 percent in US $) is explained by the integration of Intersema’s sales results. MEAS is now in 19th position (24th in 2007).
* FormFactor underwent the strongest decrease (- 51 percent in US$). This moves it to 27th position (20th in 2007).
* IMT did quite well (+ 15 percent in US $), while Colibrys was affected (-19 percent in US $ and closing of its US activity).

This year, Sanyo and Delphi have disappeared from the 2008 ranking; Sanyo has stopped its foundry activity and Delphi has dramatically reduced its MEMS staff. We believe that only development/assembly will be kept.

How will the future be? Such a crisis will come to an end only when device stock levels fall. Some information from Taiwanese players seems to indicate a restart of semiconductor production. Although it could also be the case for MEMS, Yole believes that 2009 will be a flat year for the MEMS market.