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Melody Song Industry Research & Statistics, SEMI
October 2011
PV Manufacturing Supply Chain Status and Prospects
2
Presentation Outline
• SEMI and the PV Group • Global PV Market • PV Manufacturing • Worldwide PV Equipment Bookings and Billings
Market Statistics Program • Impact of Recent Market Weakness on PV
Manufacturers • Outlook
3
About SEMI and PV Group • SEMI
– 40-year old global industry association supporting ~ 1,800 member companies worldwide
– SEMI Member Companies participate in the global manufacturing supply chains of Semiconductor, Photovoltaic, Flat Panel Display, Nanotechnology, MEMS, and LED / SSL
• PV Group – Established in 2008, PV Group
represents currently about 500 SEMI members worldwide actively engaged in PV manufacturing, from feedstock/starting materials to module assembly
Source: SEMI
4
Key Global Initiatives
• Expositions and Conferences • Technical Programs • Industry Standards • Industry Research & Statistics • Industry Collaboration and Technology Roadmap
Development • EH&S/Sustainability • Public Policy and Industry Advocacy • Special Interest Group
Source: SEMI
5
SEMI Board of Directors
Source: SEMI
• SEMI is governed by an international Board of Directors
• Five board members sit on the PV Standing Committee
– Mike Splinter, President & CEO, Applied Materials – Committee Chair
– Susumu Kohyama, President & CEO, Covalent Materials Corporation
– Eike Weber, Director, Fraunhofer Institute for Solar Energy Systems
– Zhengrong Shi, Founder, Chairman & CEO, Suntech Power Holdings
– Terry Higashi, Chairman & CEO, Tokyo Electron Ltd.
6
Presentation Outline
• SEMI and the PV Group
• Global PV Market • PV Manufacturing • Worldwide PV Equipment Bookings and Billings
Market Statistics Program • Impact of Recent Market Weakness on PV
Manufacturers • Outlook
7
-
10,000
20,000
30,000
40,000
50,000
MW
-50%
0%
50%
100%
150%New InstallationsCumulative InstallationsAnnual Growth Rate
New Installations 334 439 594 1,052 1,321 1,603 2,932 5,950 7,380 18,000
Cumulative Installations 1,762 2,201 2,795 3,847 5,167 6,770 9,160 15,110 22,490 40,490
Annual Growth Rate 20% 31% 35% 77% 26% 21% 83% 103% 24% 144%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Global PV Market
• Global PV market experienced rapid growth in the past decade • 2010 saw a record level of growth with 144% increase in worldwide new
installations • With 18GW in new installations, global total cumulative installations reached
40GW
+144%
Source: BSW, GSE, JPEA, EPIA, GTM Research, SEMI
8
Regional PV Markets – New Installations
Regional Distribution of 2010 New Installations
Canada1%
Belgium2%
China2%
Spain3%
Rest of World4%
France4%
Rest of Europe3%
Japan6%
US5%
Italy21%
Czech Republic7%
Germany42%
Source: BSW, GSE, JPEA, EPIA, GTM Research, SEMI
Germany 7,400
Italy 3,800
Czech Republic 1,300
Japan 1,030
US 887
France 800
Rest of Europe 500
Spain 500
China 400
Belgium 350
Canada 250
Rest of World 800
Global Total ~18,000
2010 New Installations (MW)
9
Regional PV Markets – Cumulative Installations
Regional Distribution of Cumulative Installations (2010)
Germany43%
Italy12%
Spain10%
Japan9%
USA6%
Rest of World20%
Germany 17,185
Italy 4,978
Spain 3,924
Japan 3,658
USA 2,458
Rest of World 8,300
Global Total ~40,500
(MW)
CumulativeInstallations
Source: BSW, GSE, JPEA, EPIA, GTM Research, SEMI
10
Presentation Outline
• SEMI and the PV Group • Global PV Market
• PV Manufacturing • Worldwide PV Equipment Bookings and Billings
Market Statistics Program • Impact of Recent Market Weakness on PV
Manufacturers • Outlook
11
Key Manufacturing Supply Chain Segments
Silicon Wafer Cell Module System
C-Si Silicon Value Chain
System Cell/Module Substrate
Thin Film Value Chain
PV Manufacturing Equipment & Materials
Source: SEMI
12
Global PV Cell Production
Source: GTM Research, JPEA, China PV Industry Alliance (CPIA), SEMI
• 2010 saw a record ~120% growth, reaching nearly 24GW global production • In conjunction with the rise of China and Taiwan has been the market share decline of
Europe and Japan
-
5,000
10,000
15,000
20,000
25,000
MW
0%
30%
60%
90%
120%ROW EuropeJapan North AmericaTaiwan ChinaAnnaul Growth Rate
China 5 6 12 50 146 438 1,088 2,600 4,000 10,000
Taiwan - - - 41 88 178 368 785 1,500 3,500
North America 100 121 103 139 153 180 266 399 595 1,200
Japan 172 253 365 604 833 927 920 1,268 1,508 2,500
Europe 74 122 200 312 473 680 1,063 1,949 1,930 3,200
ROW 23 36 66 66 101 159 295 655 1,436 3,280
Annaul Growth Rate 14% 43% 39% 62% 48% 43% 56% 91% 43% 116%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
10 Year CAGR ~60%
13
Regional Distribution of PV Cell Production
Europe20%
Japan46%
Rest of World6%
North America27%
China & Taiwan
1%
Europe26%
Japan46%
North America9%
Rest of World6%
China & Taiwan
13%
Europe25%
Japan17%
North America5%
Rest of World9%
China & Taiwan
44%
Europe14%
Japan11%
China & Taiwan
56%
Rest of World14%
North America5%
2001 2005
2010 2008
Source: GTM Research, JPEA, China PV Industry Alliance (CPIA), SEMI
14
Global Top Cell Companies
Source: GTM Research, SEMI
2010 Cell Shipment (MW)
15
Manufacturing Capacity
Indu
stry
Str
uctu
re
Hig
hly
Frag
men
ted
Mon
opol
y
Entry Barrier
Low Medium High
Cell
Module
Polysilicon
Wafer
Source: SEMI
16
0
100,000
200,000
300,000
2005 2006 2007 2008 2009 2010 2011
Poly
Cap
acity
(MT)
Polysilicon Capacity
Source: SEMI
Estimated Worldwide Polysilicon Capacity
• Poly supply has been increasing rapidly, led by new entrants from Asia • New supply has eased the constraint at the upstream of the value chain
that persisted for years
17
China’s PV Cell Manufacturing Capacity
Source: Company Financial Reporting, SEMI
0
10
20
30
40
2004 2005 2006 2007 2008 2009 2010 2011
Cel
l Man
ufac
turin
g C
apac
ity (G
W)
-
1,000
2,000
3,000
2008 2009 2010 2011C
ell M
anuf
actu
ring
Cap
acity
(MW
)
JA SolarSuntechYingliTrinaCanadian Solar
China’s PV Cell Capacity Growth
PV Cell Capacity Growth of Selected Chinese Companies
18
Presentation Outline
• SEMI and the PV Group • Global PV Market • PV Manufacturing
• Worldwide PV Equipment Billings and Bookings Market Statistics Program
• Impact of Recent Market Weakness on PV Manufacturers
• Outlook
19
• Quarterly worldwide bookings and billings data collection program for PV manufacturing equipment
• Data is based on direct inputs from PV equipment manufacturers worldwide – truly global coverage
• SEMI and the German Engineering Federation (VDMA) collaborate on data collection
• Quarterly reports provide equipment bookings and billings data by region, by supply chain segment, and by equipment type
Worldwide PV Equipment Data Program
Source: SEMI
20
• The book-to-bill ratio is most commonly used in the semiconductor equipment industry, and it is applicable to any industry that takes orders significantly in advance of billings
• Photovoltaic manufacturing equipment industry embodies such characteristics
• A book-to-bill ratio can serve as an important indicator for strategic planning and forecasting in the photovoltaic and related industries: – A ratio = 1 indicates stability – A ratio > 1 indicates growth – A ratio < 1 indicates decline
PV Equipment Book to Bill Ratio
Source: SEMI
0
500
1,000
1,500
2,000
2,500
1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011
Mill
ions
USD
-
0.50
1.00
1.50
Boo
k-to
-Bill
Rat
io
Billings Bookings Book to Bill Ratio Parity Line
21
PV Equipment Billings & Bookings
PV Equipment Bookings & Billings (US Dollars in Thousands)
2Q 2011 1Q 2011 2Q 2010 QoQGrowth
YoYGrowth
Worldwide Billings 2,031,651 1,737,339 1,519,402 17% 34%Worldwide Bookings 1,789,788 2,185,534 1,895,744 -18% -6%Book to Bill Ratio 0.88 1.26 1.25
Source: SEMI & VDMA
22
-
500
1,000
1,500
2,000
1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011
Mill
ions
USD
Americas Europe Asia ROW
Worldwide PV Equipment Billings by Region
0%
20%
40%
60%
80%
100%
1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011Americas Europe Asia ROW
85%
Source: SEMI & VDMA
• Asia has increasingly become the center of PV manufacturing capacity expansion – 85% of worldwide
billings came from Asia in 2Q’11 v.s. 60% in 1Q’10
23
Worldwide PV Equipment Bookings by Region
0%
20%
40%
60%
80%
100%
1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011
Americas Europe Asia ROW
88%
-
500
1,000
1,500
2,000
1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011
Mill
ions
USD
Americas Europe Asia ROW
Source: SEMI & VDMA
• Asia will continue to be the center of PV manufacturing capacity expansion – 88% of Q2’11
worldwide bookings came from Asia
24
Presentation Outline
• SEMI and the PV Group • Global PV Market • PV Manufacturing • Worldwide PV Equipment Bookings and Billings
Market Statistics Program
• Impact of Recent Market Weakness on PV Manufacturers
• Outlook
25
Supply Chain Impact
• PV manufacturers – Significant inventory built-up – Fierce cost and pricing competition – Sharply falling ASPs – Overcapacity and low utilization – Eroding margins – Increasing financial pressures
• PV manufacturing equipment suppliers – Customer pushing out or cancelling capacity expansion plans – Sharp decline in order intake – Significant decline in revenues expected
26
Declining ASPs
Source: Company financial reporting and SEMI
Average Module ASPs of Selected Chinese PV
Companies
Companies included: Suntech, Yingli, Trina, Canadian Solar, LDK, China Sunergy, and Renesola
-
1.00
2.00
3.00
4.00
5.00
Q1'
08
Q2'
08
Q3'
08
Q4'
08
Q1'
09
Q2'
09
Q3'
09
Q4'
09
Q1'
10
Q2'
10
Q3'
10
Q4'
10
Q1'
11
Q2'
11
Q3'
11 E
Mod
ule
ASP
s($/
W)
31% decline since Q1’11
27
Declining Gross Margins
Source: Company financial reporting and SEMI
Average and Median Gross Margins of Selected PV Companies
Companies included: Suntech, JA Solar, First Solar, Yingli, Trina, Canadian Solar, LDK, SunPower, China Sunergy, and Renesola
28
Declining Revenues
Source: Taiwan Stock Exchange and SEMI
Monthly Revenues of Selected Taiwan PV Companies
-
500
1,000
1,500
2,000
2,500
3,000
3,500
Jan-
07
Mar
-07
May
-07
Jul-0
7
Sep-
07
Nov
-07
Jan-
08
Mar
-08
May
-08
Jul-0
8
Sep-
08
Nov
-08
Jan-
09
Mar
-09
May
-09
Jul-0
9
Sep-
09
Nov
-09
Jan-
10
Mar
-10
May
-10
Jul-1
0
Sep-
10
Nov
-10
Jan-
11
Mar
-11
May
-11
Jul-1
1
Sep-
11
Mon
thly
Rev
enue
(NTD
Mill
ions
)
MotechNeo SolarGETGintech
29
-
0.50
1.00
1.50
1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011
Boo
k-to
-Bill
Rat
io
-20%
0%
20%
40%
60%
Bill
ings
and
Boo
king
s G
row
th
Rat
e
Worldwide B2B Billings Q/Q % Bookings Q/Q %
Declining Equipment Order Intake
Source: SEMI & VDMA
1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011Worldwide B2B 1.12 1.25 1.39 1.13 1.31 0.88 Billings Q/Q % 40% 5% 35% -19% 17%Bookings Q/Q % 55% 18% 9% -10% -18%
Book-to-Bill ratio dipped below parity for the first time in the past six quarters
30
Presentation Outline
• SEMI and the PV Group • Global PV Market • PV Manufacturing • Worldwide PV Equipment Bookings and Billings
Market Statistics Program • Impact of Recent Market Weakness on PV
Manufacturers
• Outlook
31
Challenging 2011 & 2012
• The PV industry entered into a down cycle at the end of the first quarter of this year due to weakness in European market
• End market demand growth is expected to be much smaller in magnitude even by the most optimistic forecast
• Europe will continue to be the dominant market in 2011 and 2012, though its market share will decline with flat or even negative growth
• US, emerging markets such as China and India, are expected to be the growth drivers
Source: 2011 and 2012 data includes forecasts by Citibank, Solarbuzz, iSuppli, Deutsche Bank, Digitmies, and SEMI
32
Ongoing Industry Structure Transformation • Significant slowdown in capacity expansion • Continued geographic shift of manufacturing to Asia • Vertical integration • Technology differentiation
– Market demand has been shifting towards solar cells with high conversion efficiencies
• Industry consolidation – Weed out inefficient capacities – Fewer, stronger, more efficient players – Industry supply chain matures
• Large corporations endorsing solar – Newcomers with strong financial capital, technology and low production
costs will likely accelerate industry transformation • TSMC • GE • Samsung
33
Industry Consolidation – DRAM Industry
Source: SEMI
Daewoo Fujitsu
Hitachi Hyundai
IBM LG Semiconductor
Matsushita Micron
Mitsubishi NEC
Nippon Steel OKI
Samsung SGS-Thompson
Sharp SONY
Tohoku Texas Instrument
Toshiba …
ProMOS
Rexchip (Elpida/Powerchip)
Samsung
Early 1990s Today
Elpida
Hynix
Inotera (Micron/Nanya)
Micron
Nanya
Powerchip
34
Industry Consolidation – Silicon Wafer Industry
Source: Nikko Citigroup Limited, SEMI
15 Suppliers 7 Suppliers
Shin-Etsu Handotai Hitachi
Osaka Titanium Corp
Japan Silicon Komatsu Electronic Metals
Wacker Siltronic
NSC Electron
MEMC Electronic Materials Texas Instruments
Toshiba Ceramics
Lucky Advanced Materials
Siltron
Showa Denko
Okmetic Crysteco
Late 1980s/Early 1990s Today
Shin-Etsu Handotai Sumco Siltronic MEMC Covalent Materials Corp. LG Siltron Okmetic
35
Industry Consolidation – Semiconductor Device Manufacturers
Source: SEMI
150mm Fabs 200 mm Fabs 300 mm Fabs 450 mm Fabs
Intel Intel Intel
AMD AMD AMD
Dallas Semi. 1st Silicon Chartered Semi
Harris Altis Flash Alliance
Hitachi AMI Semi. IBM
Kawasaki Steel Anam Semi. IM Flash
Lucent Cypress Qimonda
Motorola Grace Semi. Powerchip
Nippon Steel LSI Logic ProMOS
Siemens Motorola RexChip
SONY National Samsung
VLSI Technology SMIC SMIC
Yamaha… SONY SONY…
>100 companies ~70 companies ~30 companies
3? 4? companies
PV’s Long Term Growth Potential
• “PV power is a commercially available and reliable technology with a significant potential for long-term growth in nearly all world regions.” – IEA Solar PV Roadmap, May 2010
Source: IEA and SEMI
1.3%
4.6%
8.5%
10.8%
0.2%-
500
1,000
1,500
2,000
2,500
3,000
3,500
2010 2020 2030 2040 2050
Inst
alle
d C
apac
ity (G
W)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
PV S
hare
of G
loba
l Ele
ctri
city
G
ener
atio
n
Off-grid Capacity
Utility Capacity
Commercial Capacity
Residential Capacity
Share of global electricitygeneration in %
PV Capacity and Share of Global Electricity Generation
37
2011 SEMI International Roadmapping & Collaboration Activities • ITRPV International Technology Roadmap for Photovoltaics
(Europe) • International effort to identify critical technology needs and cost
reduction goals for PV materials, manufacturing methods, and process • 2nd edition of the International Technology Roadmap for PV released by
SEMI and CTM (Crystalline Cell Technology & Manufacturing) Group
• Stakeholder engagement: • DOE-SEMI roadmap workshop 2009, related events in 2010 and 2011 • July 2011: 2nd Annual North American PV Fab Managers Forum at
Intersolar NA • Focus on critical issues in thin film PV manufacturing shared across the
supply chain
38
US PV Manufacturing Consortium
• CIGS (Copper Indium Gallium Selenide) National Technology Roadmap
• Mission: Engage the U.S. CIGS PV community to identify key industry challenges/gaps in which a roadmap (and standards) would provide useful direction towards creating a strong U.S. manufacturing industry base and support achievement of the DOE SunShot goal.
