Polysilicon prices jump amid severe product shortages
Mark LaPedus
(05/20/2005 11:32 AM EDT)
URL: eetimes.com
SAN JOSE, Calif. — Prices for polycrystalline materials have jumped by approximately 25 percent in recent days amid ongoing and severe shortages in the marketplace. The troubling supply and pricing trends for these materials could hamper the overall growth rates in the semiconductor and solar cell industries, according to analysts.
Leading polycrystalline or polysilicon vendors — ASiMI, Hemlock, MEMC, Mitsubishi Materials and Wacker — cannot keep up with huge OEM demand and are reportedly sold out of these materials for the next two to three years, according to industry sources. Polysilicon, a material that consists of multiple small crystals, is used to make silicon wafers, solar cells and other products.
Demand is enormous, especially for solar cells. Over the last several years, photovoltaics have shown 40 percent annual market growth in terms of solar modules, according to a recent presentation by the European Photovoltaic Industry Association.
"Increasingly, the growth in demand for polysilicon from the photovoltaic market or solar cell market is straining the ability of polysilicon producers to meet demand," warned Paul Leming, an analyst with Princeton Tech Research (Princeton Junction, N.J.), in a report.
"It is becoming increasingly likely that raw materials for the production of silicon wafers — polycrystalline or polysilicon — is going to be in very short supply in 2006 and 2007," Leming said. "As semiconductor industry volumes return to the peak levels seen in the summer of 2004 — by late this year or early next year — it appears likely that polysilicon will become a limiting factor in the supply of wafers to the semiconductor industry."
Vendors are increasing their respective polysilicon production, but "incremental capacity" will not be added at least until late 2007 or early 2008, he added.
What's more, pricing for polysilicon materials has climbed from $32 per kilogram in December of 2004, to $60 per kilogram in April of 2005 and most recently to $80 per kilogram, according to Ted Parmigiani, an analyst with Lehman Brothers (New York). "Polysilicon pricing is up 150 percent during past six months, driven by limited near-term capacity growth and burgeoning solar-grade silicon demand," he said in a new report.
Poly mania
Prices quoted by Lehman Brothers are "spot prices" — not "contract prices" — for polysilicon, observed Gary Homan, vice president of marketing and sales for Hemlock Semiconductor Corp. (Hemlock, Mich.), the world's largest supplier of the materials. Hemlock is a joint venture between Dow Corning of the United States and Shin-Etsu Handotai Co. Ltd. and Mitsubishi Materials Corp. of Japan.
Contract prices for polysilicon are approximately $55 per kilogram right now, up from the upper $30 range a year ago, Homan said. "The impact has been felt over the last six months," he said.
And vendors cannot keep up with huge demand. "We're sold out for the next two to three years," he said. "We're all pretty much sold out."
Hemlock produces 7,000 tons of polysilicon materials at its production facilities, but the company is planning to add more capacity to meet demand. In doing so, the company hopes to produce 10,000 tons by 2006, he said.
Others are also responding to the shortages. In February Japan's Komatsu Ltd. signed a letter of intent to sell 75 percent of its U.S. materials subsidiary, Advanced Silicon Materials LLC (ASiMI) (Silver Bow, Mt.), to Norway's Renewable Energy Corp. AS (REC).
As part of the plan, REC plans to shift ASiMI's focus from polycrystalline materials for silicon wafers to solar applications. ASiMI's facilities are located in Butte, Mt.
In April, Germany's Wacker-Chemie GmbH (Munich) said it is expanding its polysilicon production within its plant Burghausen by another 2,500 metric tons per year. With last year's expansion activities already underway, Wacker's annual production capacity will grow from 5,000 metric tons of polysilicon right now, to up to 9,000 metric tons by 2007.
The company is investing about 200 million euros ($250.9 million) in this expansion and expects to create around 100 new jobs at its Burghausen site, said Peter-Alexander Wacker, chief executive of Wacker, a supplier of chemical products, silicon wafers and polysilicon.
"The dynamically growing solar market is leading to notable bottlenecks for photovoltaics and electronics manufacturers," he said in a recent statement. "Last year, the global solar silicon market grew by over 50 percent and market experts forecast that demand growth will average 25 percent in the medium term."
It has also developed what is claims is a novel process for granular polysilicon. Based on the fluidized-bed technique — in which trichlorosilane is the raw material — an industrial-scale process is being tested using two pilot reactors, according to the company. Granular silicon is ideal for continuous crystallization processes, the company said.
Another silicon wafer maker, MEMC Electronic Materials, Inc. (St. Peters, Mo.), also "produces polysilicon and is 90 percent self sufficient; not all silicon wafer producers are entirely shelf sufficient," Leming of Princeton Tech Research said.
"Contrary to the jokes that are routinely made about semiconductors being 'etched on sand,' the purity levels required by semiconductor manufacturers make the production of polysilicon a relatively complicated, capital intensive process," Leming said.
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