Making the machines that make solar cells

4/9/2012 2:47 PM EDT

If Facebook is paying $1b for Ingtaram? a photo sharing app, why waste time making solar cell making tool? I is a very unbalanced world now.

4/10/2012 5:20 PM EDT

Yes, that is what-a-deal!
The story of this machine is much more fascinating and life-chaning.

4/9/2012 1:44 PM EDT

Nope. Company executives said the two earlier versions were prototypes, and that they wanted to have a production version ready to go when Twin Creeks went public with the system in March. I believe they were also setting up and fine-tuning their production facility just outside Memphis. During my visit, Siva Sivaram was able to show me the shop floor via closed-circuit TV camera from his office in San Jose.

4/9/2012 5:33 PM EDT

You are correct, loptide, this isn't going to create a lot of U.S. manufacturing jobs (unless Twin Creeks starts selling wafer systems like hot cakes). But any demonstration of U.S. ability to add value in the production process is another step in the long, hard climb to restoring U.S. manufacturing. Pardon our rose-colored glasses....

4/9/2012 5:22 PM EDT

Twin Creeks claims, and it's shown in the video, that the thinner the solar cells, the more flexible they become. Watch the video and judge for yourself.

4/9/2012 5:29 PM EDT

Well, the Chinese are buying up all the Western-made equipment they can get their hands on. Twin Creeks knew that a U.S.-made wafer system would "resonate" in the Chinese solar market. That's probably true of many electronics sectors. Most solar manufacturing has moved to China. Even Applied Materials has picked up and moved most of its cleantech operations to Asia. We can argue about whether it's good or bad that China is so far its own "qualified" customer, but at least we are selling them some basic manufacturing equipment that they apparently can't by elsewhere, and the IP remains in the U.S. Indeed, much of the technical know-how still resides in the West, but that doesn't necessarily translate into U.S. manufacturing jobs.

4/9/2012 10:49 PM EDT

You are absolute right ! in order to compete with China, there must be a ground zero start up of Solar manufacturing, innovative of sliding is of course key one but it is going to work for only sliding process, there are more other processes to produce a complete solar cell. If US currently ready for the complete manufacturing readiness of solar cell together with finace back up to generate a reality of creating more employments ?

4/12/2012 7:53 AM EDT

Yes, nearly so, but not necessarily in the same way. The obvious way to decrease manufacturing costs is to replace workers with more advanced automation. If those advanced automation tools are produced in the US, and few workers are needed, then what advantage is there to moving US operations to China?

4/12/2012 11:39 AM EDT

How about generous Chinese government incentives and lower cost of capital to name a couple.

4/9/2012 6:12 PM EDT

You are probably right. This is NOT a story about Twin Creeks' saving the U.S. solar industry. No single company can do that. And yet, I find the story intriguing, because of the ingenuity of the technology developed by Twin Creeks, which was designed, developed and manufactured in the United States. Imagine, if we had a healthier solar panel industry here in the United States, Twin Creeks could probably develop Hyperion 4, 5, 6 with more technical input from the local solar panel manufacturers.

4/12/2012 12:43 PM EDT

Let's define what we mean by the "US solar industry". That encompasses a lot more than just the fabs turning out the photovoltaic wafers, and the vast majority of jobs will be in things like sales and installation. What the solar industry really needs isn't photovoltaic wafers made here: it's for the cost of using photovoltaics to decline further relative to other ways to generate power, so that going solar is a more economically attractive proposition for Those who might do it.

I was involved in a federally funded alternative energy push in the 70's when OPEC was in first flower, and gasoline was going over $1/gallon. We were certainly *aware* of solar cells, but most alternative energy source got little pick-up because using oil, even at higher prices, was still *cheaper* than the alternatives.

In that sense, photovoltaic wafer manufacturing in China is arguably *good* for the US solar industry as a while, because it reduces costs and makes solar energy generation more competitive with alternatives.

4/13/2012 1:22 PM EDT

The days of unskilled workers making $30 an hour are likely over. The question to me is can we get those who don't have any job to take one at a lower pay scale and can we get Production to the point that we can take a person with a High School education and pay them a fair (not inflated price) to do a job, with the aid of automation where possible to produce a solar (or any other product for that matter) than Americans are willing to pay for. I think Americans are willing to pay a little more to buy American, but not a lot more. Shipping costs must be going up. That will not erase lower China wages (or Chinese Government subsides either), but if it helps to close the gap and if some American Workers are willing to work for the right price we may have a solution. If not, we are doomed.

4/14/2012 12:28 AM EDT

This is a problem that affects more than unskilled labor. Value is relative. Something is worth what someone else is willing to exchange for it, and this applies to the worker's labor as well as physical goods. An assortment of workers in a variety of industries have effectively been told "What you do isn't worth what you are getting paid to do it", as ways are found to do those things cheaper.

The CEO of Delphi Automotive sent shock waves through the auto industry in 2005 by filing for Chapter 11 bankruptcy. No surprise: Delphi had workers making up to $60/hour in salary and fringes and was attempting to compete with foreign suppliers with labor costs of $10/hour. The automakers who bought the parts Delphi made were trying to reduce costs and putting enormous pressure on suppliers to lower their prices. Delphi had the choice of declaring bankruptcy, closing plants, and shedding workers to rationalize costs, or going out of business entirely. The unionized auto workers laboring at Delphi plants had priced themselves out of the market. They may have gotten other jobs, but they are unlikely to have gotten jobs paying what they used to make, because no one was willing to pay that much for what they did.

And those folks were probably classed as skilled laborers, so things are much worse for those who truly have no skills at all. We probably have a fairly large number of folks now who just won't *get* jobs, because they can't do anything anyone is willing to pay for, and more who are looking at pay cuts because the value of their skills has declined.

We need significant improvement in education to reduce the number of truely unskilled laborers. And we need to create a culture where continual learning is assumed. The job you are doing today may not exist tomorrow, and the skills you applied may be irrelevant.

4/9/2012 9:22 PM EDT

Indeed. The *value* of a solar panel is in the electricity it produces. That does not vary with production or installation cost. So the cheaper they get, the more net value for whoever owns the panel (utility or homeowner).

Assuming a reasonable location and electric rates, each watt of installed panel will produce about $6 worth of electricity over 30 years. If the cost goes down, then the owner just keeps more net income from them.

4/10/2012 11:23 AM EDT

Yep, a quicker return on the investment based on panels made from cells that are cheaper to make and easier to install because glass and other expensive, heavy materials aren't needed. Indeed, I would image panels based on 20-micron-thick cells could be integrated into future home designs like the solar shingles that Dow Chemical and others make or are marketing.

4/10/2012 11:19 AM EDT

DMcCunney highlights a fundamental point: We need to think differently about "manufacturing" means. In short, it's no longer about metal bending. With the rise of the service sector and the massive ecosystem that has arisen around delivering services, some economists now consider manufacturing to be part of a broader category that takes in the sector. They call it "production," as in "Google services must be produced." Stayed tuned for more on the important distinction to be made between "manufacturing" and "production".

4/12/2012 12:33 PM EDT

Precisely. Consider manufacturing still done here and related services. The auto industry still has US plants turning out cars. It's overall faster, cheaper, and more flexible to assemble finished vehicles here than to build them elsewhere and ship them here. The UAW has been forced to accept changes in the sorts of deals they could once offer workers because the industry can't afford them, but the plants remain.

Meanwhile, once those cars are sold, someone has to maintain them. A friend was talking about the two year automotive program at the high school she attended, where the first week, the student picked a car at a junkyard, and spent the rest of the program learning how to rebuild it from scratch: engine, transmission, brakes, electrical system, body work, upholstery, painting - everything. At the end of the course, the kids who passed had running cars they had restored. Local dealerships salivated over the graduates.

If I were advising a kid on a possible career these days, auto mechanics might be an option I'd suggest. Dealerships are all looking for skilled mechanics, there's good money, and by definition, the job *can't* be outsourced. It has to be done here. And those mechanics in the "services" sector may make rather more than the guy on the line at the assembly plant.

4/10/2012 12:22 PM EDT

I personally try to divide it into two categories.

Production needed to ensure that the economy exports enough to pay for the imports. That part of the economy doesn't really employ that many people and arguably never has compared with the total.

Production needed to keep people employed. That's basically services. People selling hairdressing to each other or whatever.

The funny thing is that the value of these services are basically a function of the value of the currency and not of the underlying productivity (compare coffeeshops in different countries, same service but maybe x10 difference in price).

The value of the currency depends on the trade balance (except for US due to its position) and flows of money. And here is were the huge magnifier of wealth is accomplished in the developed economies. Due to the value of currencies, completely marginal service jobs get valued very highly measured in the amount of imports they enable. So in the end, people that has never set their foot in a factory and never cared about anything productive can still live rich lives due to the maybe 10% of the population that's generating the fundamentals needed to uphold the currency value.

4/10/2012 12:06 AM EDT

The equipment involved is highly complex, and copying it would not be a simple process. It might be *possible*, but it's cheaper and faster to simply buy the gear from the US manufacturer.

And as for "legal/actionable", legal under whose laws and actionable in what court? One of the US tech CEOs commented a while back to the effect of "File an IP infringement case against a Chinese company in a Chinese court, and tell me what you get."

Photovoltaics are semi-conductor electronics. It's a classic capital intensive business, where the biggest cost is the cost of the factory that makes the stuff, and each piece must carry an allocated share of the overhead as part of the cost of manufacture. The more you make, the smaller the overhead share is, and the cheaper you can price.

What Twin Creeks gear produces is the solar cells, and their equipment no doubt costs a *lot*. But the other costs of building the factory, including acquiring the land and building the building, will be far lower in China than here, aside from having lower ongoing operating costs once on-line. So no, I doubt you could make it cost competitive to do in the US, and I frankly don't see why you would *need* to.

The product produced by Twin Creeks gear is wafers. Semi-conductor wafers are low value commodities, where margins will be thin and you want economies of scale and market share to make any money producing them. The value is added at other steps in the chain, as those wafers are used as components of an actual working product. A lot of *that* may well be done here.

I don't *care* that the photo-voltaic wafers are actually made in China. I care about what I can put them into *here*, creating products designed by US engineers and assembled by US workers to solve problems for US customers. The money and the jobs are in the solutions I can craft, not in the materials I use to craft them.

4/10/2012 2:41 AM EDT

["It might be *possible*, but it's cheaper and faster to simply buy the gear from the US manufacturer."]
That is certainly true for the first few units.
Come back in 7 years time, and see if China is still buying numbers 1000-1100 (?) from offshore.

4/10/2012 12:29 PM EDT

They might be. The sort of gear Twin Creeks is selling is high end capital goods, with a very hefty price tag per unit. How big is the total market for such equipment? The Chinese might very well be able to duplicate it. Would it be worth the time and expense needed to do it?

From a purely economic standpoint, it might not. There might be political reasons why they might choose to that had little to do with economics.

4/10/2012 11:27 AM EDT

I asked Siva Sivaram that question. His response is that Twin Creeks has a next-generation machine in the works capable of producing 8 MW worth of cells per year. Will that be enough? Who knows? But Twin Creeks knows it can't stand still in the cleantech market. Whether they can stay ahead of the curve remains to be seen, but they are certainly doing a better job than Solyndra and others who's business models have been overtaken by events like tanking solar panel prices.

4/13/2012 12:13 AM EDT

Thanks George (and others above). Lets hope they can keep their heads above water. They're certainly doing what the US does best, so good luck to them.