SAN JOSE, Calif. — Prices for polysilicon are expected to see further increases this year and next amid ongoing shortages for the materials, warned an analyst.
“The rapid increase in solar cell production, and rising IC unit volumes, triggered a polysilicon shortage, [are] forcing solar cell manufacturers to pay significantly higher prices to secure silicon supply,” said Jesse Pichel, an analyst with Piper Jaffray Inc., an investment banking firm.
“The contract price of polysilicon has soared 80 percent in the last 18 months to $60/kg, and we anticipate further increases to $80/kg in 2006 and more in 2007,” he said in a new report.
Polysilicon contracts are sold out through 2007; spot prices for these materials recently reached $140/kg, he added.
Leading polysilicon vendors 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.
After sizzling growth in recent times, the solar energy market is projected to dim and “hit the wall” for panel, equipment and materials vendors in 2006, according to the analyst.
The projected slowdown in the solar market for 2006 is mainly due to ongoing and severe shortages of polysilicon, Pichel said. Growth is projected to resume in 2007, when more polysilicon supply becomes available, he said.
Chip and solar-panel makers won’t admit it, but many are feeling the brunt of the supply problems. For example, SunPower Corp., a solar panel maker backed by Cypress Semiconductor Corp., buys mono-crystalline ingots for 80 percent of its production requirements, and cut wafers for 20 percent, according to the analyst. It has multiple suppliers providing raw polysilicon, contracted wafer production and ingots.
Through 2005, SunPower contracted at $108/kg per ingot based on polysilicon priced at $50-to-$55/kg, according to Piper Jaffray. “We believe that the contract price rose to $115/kg per ingot in December 2005, based on polysilicon priced at $65-to-$75/kg,” according to the report.
“For 2006, we believe SunPower has contracted at $145/kg per ingot and $85/kg for polysilicon,” the report said. “Although SunPower has [about 75 megawatts] of polysilicon under contracts and purchase orders, we believe that 23 megawatts of its 2006 needs are at risk. So, SunPower is likely to tap the spot market for supply.”
For 2007, SunPower currently has about 110 megawatts of polysilicon allocated by vendors, and 75 megawatts under contract and purchase orders. “Polysilicon prices should remain high for the year, with spot pricing expected to exceed 100/kg and ingot pricing more than 150/kg,” according to the report.
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