By Lou CoveyEditorial Director
Last week we did a piece on the dysfunctional relationship between the semiconductor industry and the silicon wafer industry. Both have the potential of healing the rift and ensuring a profitable give and take for several decades, but there is also the potential that, if attitudes do not change within the next decade, it will get even worse.
Last week’s article pointed out that the wafer companies stuck it to the semi industry when the solar boom hit 10 years ago. Wafer fabs shifted resources to solar because the requirements for solar cells was not as stringent as those for semiconductors, and then they jacked up the prices for semi customers. The chip companies took it in stride, but when the solar bubble popped five years ago they started demanding and getting price concessions and have been for several years, in the face of rising demand for computing silicon.
Here’s the rub. The solar panels containing that silicon had a 20-year lifespan when they were installed. It is now 10 years later and those early panels are showing degradation now, with an average degradation of 1 percent per year. By the end of the second decade, early adopters will be back on the power grid unless they replace the older, less efficient panels. That is going to create a new demand for silicon wafers for solar panel use in 10 years.
IBM stepped up with new processes to recycle semiconductor wafers and will be going into the business of supplying material to the solar industry, but the wafer industry as a whole could repeat history by looking to make a quick killing by selling cheap product to solar and jacking up prices again. It’s time for both sides to sit down and plan accordingly.