Lower-quality polysilicon faces a tough road aheadThe price differential has narrowed in 2010 between 6N semiconductor-grade Upgraded Metallurgical Silicon (UMG) and Fluidized Bed Reactor (FBR) material, a competing technology of 9N semiconductor grade, to the point where wafer and cell manufacturers can now afford to buy the higher-quality polysilicon because the ef?ciency boost at the cell and module levels is justi?ed.
FBR, in particular, has made significant steps forward, with Renewable Energy Corp. and MEMC Corp successfully bringing this technology to production scale while offering 9N quality. While in the past FBR has been hard to reach production scale—requiring expertise not found in many solar companies—the technology brings to the market a low energy requirement on production relative to the incumbent technology, which reduces costs.
With polysilicon capacity growing to 122,000 metric tons in 2009—and forecasted to rise to 180,000 metric tons in 2010—a major market shift has begun in terms of the top players and the type of polysilicon product that is being purchased, leaving UMG on the short end of the stick.
The Rise of UMG
Before 2006, most of the polysilicon available for solar use was recycled from semiconductor wafer operations such as those run by foundries operated by Taiwan Semiconductor Manufacturing Corp. (TSMC). The use of recycled polysilicon was required because of severe capacity constraints in the market.
This created an opportunity for companies to focus on creating this lower-grade polysilicon, which would not require the money or expertise needed for a semiconductor-grade 9N solution.
With prices rising throughout 2006 and 2007, the business case for UMG was sound with players touting 6N quality polysilicon and displaying roadmaps to get to 9N in the foreseeable future. However, as capacity rose to 66,000 metric tons by 2008, up from 39,000 metric tons in 2006, supply was catching up to demand.
The Fall of UMG
As 2008 came to an end, there was significant turmoil in the market when solar demand collapsed in the Spanish market. As many downstream players cut production, this affected the polysilicon market significantly, which until then had been the bottleneck in the industry, driving prices up to more than $400/kg in mid 2008.
As pricing plummeted through 2009, the price gap between 9N Siemens and FBR solutions and 6N UMG narrowed to the point where wafer and cell manufacturers could afford to buy the higher-quality polysilicon as it justified the efficiency boost at the cell and module levels.
Timminco shipped 1,045 metric tons of UMG polysilicon in 2008, a total that then dramatically dropped to only 182 metric tons in 2009.
Given the high quality of competing technologies and the price equilibrium that’s been reached, iSuppli believes the days of UMG being a viable player in the solar polysilicon market are over.