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March 2011
The PV Newsletter 

Potential Impacts of the Earthquake and Damaged Nuclear Power Plants on the Semiconductor and Solar PV Industries



Linx-AEI wishes to express our condolences to the people of Japan during this horrible tragedy.  Foremost in our hearts and minds are the Japanese people and their plight during this time of sorrow. 




Mike Corbett  

Managing Partner

Linx-AEI Consulting 

Short Term Impact of The Earthquake on The Semiconductor Industry


Potential short-term shortages of 300mm wafers

  1. Shin-Etsu Handotai (SEH), has revealed that operations at several production sites, including SEH's Shirakawa plant in FukushimaPrefecture, will remain closed due to the quake's impact that has shutdown electric power supply in the area. SEH's monthly 12-inch wafer capacity is estimated at about 1.2 million units, of which 800,000 are produced at the Shirakawa plant.  
  2. MEMC has reported that operations at the Utsunomiya are also suspended. As a result, MEMC expects that shipments from this facility will be delayed over the near term.  The facility is one of three that slices and polishes 300mm wafers.  
  3. SUMCO is a major supplier of silicon wafers and has about 30% of the semi wafer market.  The company has a facility that is Located 200 miles north of Tokyo in Yonezawa, Japan.  The Yonezawa plant has suspended operations.  It produces 300mm diameter crystal and 300mm bonded silicon-on-insulator wafers.  

Potential short-term concerns regarding power and logistics


There are concerns about the logistics of delivering critical materials to semiconductor fabrication plants and shipping out of Japan, as well as, rolling power outages that may impact production for chip producers, suppliers and sub-component manufacturers.  Rolling power outrages may also cause the price of power to escalate, impacting upstream raw materials.


Short term impact on the Solar PV industry 

AU Optronics and SunPower may be impacted through their reliance on M. SETEK assets in the affected areas in Japan. M. SETEK has a 3,000 metric ton poly plant expanding to 7,000 metric tons in Soma, Japan and this plant may be damaged and offline for a period of months.

Impact on the Silicon Industry Value Chain 


We see immediate concerns to the value chain around 300mm wafering.  On the whole, we anticipate that there will be little long-lasting impact to the polysilicon value chain as the current polysilicon supply and demand situation can absorb this level of loss, as illustrated on a macro level, below:

polysilcon capacity 

However, this does not preclude the possibility of pricing spikes and short-term inventory accumulations and other issues of sub-optimal efficiency, as the supply chain reconfigures itself.


The projections above are built on our estimates of a relatively modest 9% PV industry growth from 2010 to 2011.  This growth scenario reflects:

  • Reduced subsidy support in Germany, making PV installations less attractive
  • Module price reductions in 1H2011 coinciding with subsidy reductions to re-start the market

Long Term impact on the Solar industry  

Clearly, the impact of the earthquake in Japan will have more impact in the very short-term but it is unlikely to drive long-term dislocations. We see any short-term effects of the shifting silicon landscape as temporary, but believe incumbent suppliers with semiconductor grade qualifications may benefit in the medium and long-term while new suppliers will experience some revenue diversification effects mitigated by the ability of existing qualified suppliers to react faster with available supplies. Solar silicon materials have been relatively in tight supply as solar module market volumes have been "pulled in" during the last several quarters.  With changes in subsidy programs in Europe causing international funding sources of equity and debt to freeze recently, the immediate market forces for solar silicon materials has put downward pressure on demand for supplies.  


We believe that the damage to the nuclear industry can benefit the world view of renewable energy sources without a catastrophic risk profile.  Until recently, the debate over renewable energy did not include nuclear power as part of the clean and renewable energy solution sweeping the globe.  This is a relatively new development identifiable to changing public opinion and politics in the last three to five years.  Before this change and improved status for nuclear energy, the "catastrophic risk profile" of nuclear power and the politics of all things nuclear had meant strict government control and more sensitivity given the wide-ranging risks.  Despite nuclear power as essentially one derived from an infinite, or practically infinite, regenerative resource, governments and interest groups (industry and environmental, ngo's etc) rarely treated nuclear power as a renewable.  This may change back to what it once was with nuclear power relegated to post-3Mile Island/Chernobyl status.  


The fear of nuclear power seems likely to reemerge as the "first factor" in the debate for some time to come.  Should a complete, and according to official sources, very unlikely meltdown actually occur in Japan's stricken nuclear power plants, the fear factor will result in a significant cancellation in the approximately $400 billion global spend on new nuclear investment worldwide.  Given what has already occurred which is, of course, an unmitigated tragedy respecting the failing nuclear plants in Japan, we think those groups who only recently were willing to accept new nuclear energy as "part of the clean and renewable power solution" may rethink their stance and revert back to seeing nuclear as separate and distinct from solar and other renewable and truly green forms of energy.

We'll keep you informed of the impact of this unfortunate situation on the semiconductor and PV industries worldwide as it unfolds. For more information about the earthquake's impact on the industry or to discuss how it will impact your business, call us at 973.437.4517 or email us.


Linx Consulting