The solar industry has not only been maturing on the technological side, but it has also been gaining political favors as both developed- and emerging-market countries look for solutions to their expanding set of energy, emissions and fuel problems. What does this have to do with the semiconductor industry? Quite a bit given not only the long, interconnected history of the two industries, but also given the recent diversification trends in semi.
One of the many recent M&A deals highlighting the importance of the solar industry as a diversification strategy for semi was the 1Q11 announcement by HonHai to purchase a majority stake in E-Ton Solar Tech here; E-Ton is a solar cell producer (see here for a review of the KPMG survey on M&A activity in solar). More recently, last week Foxconn, a subsidiary of HonHai, announced diversification moves into solar through M&A with Inventec, as reported by DigiTimes. While there are the obvious opportunities for semi's interest in the solar photovoltaic (PV) industry, such as shared materials (e.g., polysilicon) and components (numerous semi components are used in PV panels, inverters, etc., see here for example), semi's mature understanding of cost-aware manufacturing is critical at this juncture for solar to overcome present challenges.
Presently, the solar industry is facing significant problems that include a downturn in ASPs as inventories have swelled, continued cost control issues for US residential and commercial solar installations (see this article from GreenTech Media on the DOE grants to solve the problems), the scale back of feed-in-tariffs (FiTs) in Europe (see here), and the continued quest for better yield from PV systems. Couple these challenges with both consumer and corporate demand-weakness and the opportunity for semi to conquer solar challenges becomes clear. Semi has a history of dealing with complex regulatory and governmental challenges as well as the ability to enact lean manufacturing and assembly requirements. Additionally, the synergies from the shared materials and technologies make this diversification opportunity less risky for semi.
Nevertheless, solar continues to face many challenges in adoption and continued competition from traditional energy sources. Yet, with the recent Japanese Fukushima Daiichi reactor problems, and political reactions such as Germany's to end the support of nuclear energy, solar continues to be a viable and important energy solution. China's recent five-year plan for 2011-2015 states a goal of 10GW worth of solar installations by 2015 and 50GW by 2020; along with these goals comes significant monetary support of the equivalent of US $700-800 billion, according to the 6/9/11 report by DigiTimes.
With the Intersolar Europe conference having just wrapped up in Munich, Germany, you can read more about the latest progress, research and new technologies that underscore the semi and solar interconnects here from ElectroIQ.