Solar industry growth begins to limit supply of silicon to semiconductor industry.

The growth of the world solar photovoltaics industry could have a negative impact on the semiconductor industry's shift to 300 mm fabrication plants. Rapidly rising demand for polysilicon from the fast-growing solar industry has forced polysilicon producers to run at full capacity leading to

"predicted shortfalls of semiconductor-quality polysilicon starting this year and extending into 2008," according to the Sematech consortium's Critical Materials Council (CMC). "Basically, everyone is running everything they have" to keep up with silicon demand, says Dave Keck, vice president of Advanced Silicon Materials, LLC.

The chip industry currently consumes about two-thirds of manufactured silicon; photovoltaics consumes one-third. But demand for PV panels is growing at about 30 percent a year.

"There is not enough polysilicon to support the growth of the photovoltaic industry after 2008," much less the increased needs of the semiconductor industry as it converts to 300 mm wafers, says Keck.

The industry is expected to produce 26,000 metric tons of polysilicon this year, 4,000 metric tons short of demand. Polysilicon capacity additions should increase yearly production to 29,000 metric tons by 2006, but that will still be 6,000 metric tons short of demand. In 2007, demand is expected to exceed production by 12,000 metric tons, growing to a projected shortfall of 20,000 metric tons in 2008.

Incremental expansion of existing facilities, building new plants, identifying new materials for customer use "and forming consortia to tackle the issue on a unified basis" are some of the options that must be pursued, says Gary Homan, marketing vice president at Hemlock Semiconductor.

"We are probably underestimating the polysilicon demand" from 300 mm wafer conversion, says Homan, in which case "there are people who will not get supplied [with polysilicon] in the future." There could be forty 300 mm fabs in operation around the world in 2006.

Adds Neil Gayle, a Sematech manager and CMC coordinator: "We'll investigate the possibilities for expanding the supply of polysilicon and work with suppliers and manufacturers to try to develop a coordinated response. Even if a polysilicon shortage is unavoidable, we may be able to find ways to soften the impact on our member companies and the industry."