netrashetty
Netra Shetty
Silicon Graphics, Inc. (commonly initialised to SGI, historically sometimes referred to as Silicon Graphics Computer Systems or SGCS) was a manufacturer of high-performance computing solutions, including computer hardware and software, founded in 1981 by Jim Clark. Its initial market was 3D graphics display terminals, but its products, strategies and market positions evolved significantly over time.
Initial systems were based on the Geometry Engine that Clark and Marc Hannah had developed at Stanford University, and were derived from Clark's broader background in computer graphics. The Geometry Engine was the first very-large-scale integration (VLSI) implementation of a geometry pipeline: specialized hardware that accelerated the "inner-loop" geometric computations needed to display three-dimensional images.
SGI was headquartered in Sunnyvale, California; it was originally incorporated as a California corporation in November 1981, and reincorporated as a Delaware corporation in January 1990. In May 2006, SGI filed for Chapter 11 bankruptcy protection from which it emerged a few months later, but on April 1, 2009 filed for Chapter 11 again and announced that it would sell substantially all of its assets to Rackable Systems, a deal finalized on May 11, 2009, with Rackable assuming the name "Silicon Graphics International".
Silicon, essentially sand, is the second-most abundant element on Earth. Since the start of the Computer Age, though, silicon has been used primarily to make semiconductors, for computer chips; to be useful as a semiconductor, the stuff must be refined to a purity of 99.99999%[1], in factories that cost many millions to build and operate. This made refined silicon a commodity, since it is all essentially the same no matter who refines it or where it comes from, but a limited number of refineries means there is a limited supply.
The advent of the solar industry created a new source of demand for refined silicon; pure silicon makes up 45% of a photovoltaic cell's cost,[2] and the solar industry has grown 41% per year by MW installed since 2001.[3] At the same time, little new refining capacity was being added. In 2004, demand outstripped supply, and in 2005 supply was 30% less than demand.[4] As a result, solar-grade polysilicon prices have risen from $24 per kg in 2004[5] to $450 per kg in 2008[6]. The price of this input has wide-ranging applications, from the cost of many consumer electronics to the future competitiveness of solar power.
Who Benefits from Rising Silicon Prices
Contents
1 Who Benefits from Rising Silicon Prices
2 Who Loses from Rising Silicon Prices
3 Causes of Silicon Price Fluctuations
3.1 Silicon Demand
3.1.1 Demand for Computer Chips and Radio Transmitters
3.1.1.1 The Advent of the Smartphone Will Increase Demand for Semiconductors
3.1.1.2 Emerging Markets are Increasing Worldwide Demand for Computers
3.1.1.3 The Personal Computers are Prone to Replacement Cycles, Causing the Market to Fluctuate every 4-6 Years
3.1.2 Demand for Photovoltaics
3.2 Silicon Supply
3.2.1 A Shortage of Refining Capacity is a Shortage of Silicon
4 Notes
Silicon refiners like MEMC Electronic Materials and HOKU Scientific see higher revenue, income, and margins when the price of refined silicon rises.
LDK Solar, a solar silicon wafer manufacturer, is has contracted Fluor to build the largest silicon refinery in the world; started in 2007, the plant will be completed in 2009, and have an output capacity of 15,000 tons per year.[7]
Heavy construction and manufacturing firms, like Fluor and GT Solar that are being contracted to build new silicon refineries for companies like LDK Solar will see higher earnings increase.
First Solar, Ascent Solar Technologies, and DayStar Technologies (DSTI) are three solar companies that make thin-film solar cells out of materials other than silicon. This puts them at an advantage in their industry, as much of what makes PV expensive is the cost of silicon, so these companies can produce at lower cost than their competitors.
Who Loses from Rising Silicon Prices
Silicon-based solar cell manufacturers and solar system installers like SunPower, Suntech, Evergreen Solar, JA Solar Holdings, EMCORE, Uni-Solar, Trina Solar, and Akeena Solar are less competitive with other renewable energy producers because the cost of solar is 45% dependent on the cost of silicon; the higher the price of silicon, the higher the price of solar energy.[8]
Solar wafer manufacturers like LDK Solar and Kyocera will be hurt by the rising cost of their primary input.
Semiconductor manufacturers will see margins shrink as the cost of their main input increases.
Telecommunications companies making or using anything from fiber optics to smartphones to computer chips suffer the same as semiconductor makers; these companies include EMCORE, Verizon, Apple, Intel, Research in Motion. It should be noted that silicon is a small part of the cost of a telecommunications, when compared to solar, but when devices are sold en masse, costs add up.
Causes of Silicon Price Fluctuations
Silicon Demand
Simple microeconomics states that if demand for silicon rises, the price of silicon will rise; conversely, if demand for silicon falls, the price of silicon will fall. Silicon is primarily made into semiconductors. Semiconductors are used to make all microchips and anything that receives radio waves; this ranges from car radios to WiFi cards. They are also used to produce photovoltaic cells.
Demand for Computer Chips and Radio Transmitters
Though silicon costs are a small part of the cost of a computing device, when computer chips are made by the hundreds of millions, the effects on the market add up. Big growth prospects for the computer industry, coming from technologies like the smartphone, as well as worldwide economic growth enabling millions to purchase cell phones and computer mean millions more computing devices - with their silicon chips - will sell in coming years.
The Advent of the Smartphone Will Increase Demand for Semiconductors
Though Research in Motion's Blackberry phone brought the "smartphone" to enterprise consumers, who were thrilled to be able to check their email and browse the web wherever they were, the release of Apple's iPhone has sparked an all-out smartphone war by showing that the audio, video, and data ("triple-play") functionality of more complex phones appeal to the masses (much in the same way the iPod revolutionized portable music). Smartphones use silicon in their central processing unit, but often have more silicon chips like multimedia processors, memory cards, and video encoders/decoders, as well as radio chips for wireless and Bluetooth connectivity, so future demand for these products will have a tangible effect on the demand for silicon.[9] Globally, less sophisticated cell phones with fewer semiconductors have penetrated nearly every market; there are approximately 3 billion cell phone users worldwide, and in developed countries, penetration rates can actually be higher than 100% (i.e. people have multiple phones)[10], so smartphones are the industry's attempt to increase sales growth. Researchers have predicted that smartphone sales will grow at a compounded annual growth rate of 30% until the end of 2012, outstripping single-digit growth of normal cell phones; already, there are more smartphones in the world than laptops.[11]
Emerging Markets are Increasing Worldwide Demand for Computers
Worldwide PC shipments are predicted to rise nearly 11% in 2008, driven in large part by demand from emerging economies. In the fourth quarter of 2007, PC shipments to emerging markets grew 22% and accounted for 60% of global growth.[12] As economies like those of the BRIC countries (Brazil, Russia, India, China) grow, institutions like corporations, schools, and the government both need and can afford better technology. At the same time, growing middle-classes mean increasing demand for consumer technology. As demand for computer technology increases around the world, demand for silicon will rise as well.
The Personal Computers are Prone to Replacement Cycles, Causing the Market to Fluctuate every 4-6 Years
PC replacements are the cause of 60% of worldwide PC shipments, and 80% of U.S. PC shipments. The last major replacement cycle occurred from 2004-2005, according to research firm, Garter, Inc., and the next one is predicted to begin in 2009.[13] Despite growth fueled by demand from emerging economies, the number of PC shipments will skyrocket once the next replacement cycle occurs and consumers in developed countries, who can afford new, expensive technologies, trade in the old for the new.
Demand for Photovoltaics
About 45% of the cost of a solar panel comes from the silicon used to make the surface semiconductor[14], so demand for solar cells plays a huge part in the demand for silicon. Crystalline silicon PV cells make up about 90% of the PV market[15], and use about 10 grams of silicon per watt[16]. Since 2001, the solar industry has grown at a rate of 41% per year[17], with worldwide PV installations rising from 1.7GW to 2.8GW between 2006 and 2007.[18] This means that the amount of silicon demanded just from the solar industry increased from 17 million kilograms to 28 million kilograms in a year, and thanks to rising energy prices, fears of climate change, and the desire for energy independence, world demand for PV cells are projected to increase at similar rates for the next few years[19], pressuring silicon demand upwards.
Companies like First Solar and Suntech produce thin-film solar cells that use little-to-no silicon. Even makers of solar panels that aren't thin-film are working to reduce silicon use; SunPower, for example, uses 6.3 g/watt[20], and Evergreen Solar uses 5 g/watt.[21] As solar cell manufacturers adapt their panels to the high-silicon-price environment and reduce their use of the material, demand growth for it will slow.
Silicon Supply
The supply of silicon affects silicon prices in the opposite way of silicon demand. As supply rises, prices fall, and as supply falls, prices rise.
A Shortage of Refining Capacity is a Shortage of Silicon
Silicon is the second-most abundant element on Earth, making up 28% of the crust by weight[22], so silicon shortages don't happen because of shortages of the raw materials. To be used in semiconductors, however, silicon must have a purity of 99.99999%[23], and to be used in solar cells it must have a purity of 99.9999%.[24] Purifying silicon requires expensive capital equipment; a 1 million kg/year refinery owned by Sharp Corporation cost $40 million to build in 2007.[25] If yearly demand for refined silicon outpaces refinery capacity, as it did when the solar market started to expand in 2001[26], then there won't be enough of the stuff to go around, causing prices to go through the roof. When prices rise, however, silicon refiners have more incentive to invest in increasing production. Many analysts expect that by 2012, so much new refining capacity will have come online that there will be an oversupply, and prices will fall.[27]
Initial systems were based on the Geometry Engine that Clark and Marc Hannah had developed at Stanford University, and were derived from Clark's broader background in computer graphics. The Geometry Engine was the first very-large-scale integration (VLSI) implementation of a geometry pipeline: specialized hardware that accelerated the "inner-loop" geometric computations needed to display three-dimensional images.
SGI was headquartered in Sunnyvale, California; it was originally incorporated as a California corporation in November 1981, and reincorporated as a Delaware corporation in January 1990. In May 2006, SGI filed for Chapter 11 bankruptcy protection from which it emerged a few months later, but on April 1, 2009 filed for Chapter 11 again and announced that it would sell substantially all of its assets to Rackable Systems, a deal finalized on May 11, 2009, with Rackable assuming the name "Silicon Graphics International".
Silicon, essentially sand, is the second-most abundant element on Earth. Since the start of the Computer Age, though, silicon has been used primarily to make semiconductors, for computer chips; to be useful as a semiconductor, the stuff must be refined to a purity of 99.99999%[1], in factories that cost many millions to build and operate. This made refined silicon a commodity, since it is all essentially the same no matter who refines it or where it comes from, but a limited number of refineries means there is a limited supply.
The advent of the solar industry created a new source of demand for refined silicon; pure silicon makes up 45% of a photovoltaic cell's cost,[2] and the solar industry has grown 41% per year by MW installed since 2001.[3] At the same time, little new refining capacity was being added. In 2004, demand outstripped supply, and in 2005 supply was 30% less than demand.[4] As a result, solar-grade polysilicon prices have risen from $24 per kg in 2004[5] to $450 per kg in 2008[6]. The price of this input has wide-ranging applications, from the cost of many consumer electronics to the future competitiveness of solar power.
Who Benefits from Rising Silicon Prices
Contents
1 Who Benefits from Rising Silicon Prices
2 Who Loses from Rising Silicon Prices
3 Causes of Silicon Price Fluctuations
3.1 Silicon Demand
3.1.1 Demand for Computer Chips and Radio Transmitters
3.1.1.1 The Advent of the Smartphone Will Increase Demand for Semiconductors
3.1.1.2 Emerging Markets are Increasing Worldwide Demand for Computers
3.1.1.3 The Personal Computers are Prone to Replacement Cycles, Causing the Market to Fluctuate every 4-6 Years
3.1.2 Demand for Photovoltaics
3.2 Silicon Supply
3.2.1 A Shortage of Refining Capacity is a Shortage of Silicon
4 Notes
Silicon refiners like MEMC Electronic Materials and HOKU Scientific see higher revenue, income, and margins when the price of refined silicon rises.
LDK Solar, a solar silicon wafer manufacturer, is has contracted Fluor to build the largest silicon refinery in the world; started in 2007, the plant will be completed in 2009, and have an output capacity of 15,000 tons per year.[7]
Heavy construction and manufacturing firms, like Fluor and GT Solar that are being contracted to build new silicon refineries for companies like LDK Solar will see higher earnings increase.
First Solar, Ascent Solar Technologies, and DayStar Technologies (DSTI) are three solar companies that make thin-film solar cells out of materials other than silicon. This puts them at an advantage in their industry, as much of what makes PV expensive is the cost of silicon, so these companies can produce at lower cost than their competitors.
Who Loses from Rising Silicon Prices
Silicon-based solar cell manufacturers and solar system installers like SunPower, Suntech, Evergreen Solar, JA Solar Holdings, EMCORE, Uni-Solar, Trina Solar, and Akeena Solar are less competitive with other renewable energy producers because the cost of solar is 45% dependent on the cost of silicon; the higher the price of silicon, the higher the price of solar energy.[8]
Solar wafer manufacturers like LDK Solar and Kyocera will be hurt by the rising cost of their primary input.
Semiconductor manufacturers will see margins shrink as the cost of their main input increases.
Telecommunications companies making or using anything from fiber optics to smartphones to computer chips suffer the same as semiconductor makers; these companies include EMCORE, Verizon, Apple, Intel, Research in Motion. It should be noted that silicon is a small part of the cost of a telecommunications, when compared to solar, but when devices are sold en masse, costs add up.
Causes of Silicon Price Fluctuations
Silicon Demand
Simple microeconomics states that if demand for silicon rises, the price of silicon will rise; conversely, if demand for silicon falls, the price of silicon will fall. Silicon is primarily made into semiconductors. Semiconductors are used to make all microchips and anything that receives radio waves; this ranges from car radios to WiFi cards. They are also used to produce photovoltaic cells.
Demand for Computer Chips and Radio Transmitters
Though silicon costs are a small part of the cost of a computing device, when computer chips are made by the hundreds of millions, the effects on the market add up. Big growth prospects for the computer industry, coming from technologies like the smartphone, as well as worldwide economic growth enabling millions to purchase cell phones and computer mean millions more computing devices - with their silicon chips - will sell in coming years.
The Advent of the Smartphone Will Increase Demand for Semiconductors
Though Research in Motion's Blackberry phone brought the "smartphone" to enterprise consumers, who were thrilled to be able to check their email and browse the web wherever they were, the release of Apple's iPhone has sparked an all-out smartphone war by showing that the audio, video, and data ("triple-play") functionality of more complex phones appeal to the masses (much in the same way the iPod revolutionized portable music). Smartphones use silicon in their central processing unit, but often have more silicon chips like multimedia processors, memory cards, and video encoders/decoders, as well as radio chips for wireless and Bluetooth connectivity, so future demand for these products will have a tangible effect on the demand for silicon.[9] Globally, less sophisticated cell phones with fewer semiconductors have penetrated nearly every market; there are approximately 3 billion cell phone users worldwide, and in developed countries, penetration rates can actually be higher than 100% (i.e. people have multiple phones)[10], so smartphones are the industry's attempt to increase sales growth. Researchers have predicted that smartphone sales will grow at a compounded annual growth rate of 30% until the end of 2012, outstripping single-digit growth of normal cell phones; already, there are more smartphones in the world than laptops.[11]
Emerging Markets are Increasing Worldwide Demand for Computers
Worldwide PC shipments are predicted to rise nearly 11% in 2008, driven in large part by demand from emerging economies. In the fourth quarter of 2007, PC shipments to emerging markets grew 22% and accounted for 60% of global growth.[12] As economies like those of the BRIC countries (Brazil, Russia, India, China) grow, institutions like corporations, schools, and the government both need and can afford better technology. At the same time, growing middle-classes mean increasing demand for consumer technology. As demand for computer technology increases around the world, demand for silicon will rise as well.
The Personal Computers are Prone to Replacement Cycles, Causing the Market to Fluctuate every 4-6 Years
PC replacements are the cause of 60% of worldwide PC shipments, and 80% of U.S. PC shipments. The last major replacement cycle occurred from 2004-2005, according to research firm, Garter, Inc., and the next one is predicted to begin in 2009.[13] Despite growth fueled by demand from emerging economies, the number of PC shipments will skyrocket once the next replacement cycle occurs and consumers in developed countries, who can afford new, expensive technologies, trade in the old for the new.
Demand for Photovoltaics
About 45% of the cost of a solar panel comes from the silicon used to make the surface semiconductor[14], so demand for solar cells plays a huge part in the demand for silicon. Crystalline silicon PV cells make up about 90% of the PV market[15], and use about 10 grams of silicon per watt[16]. Since 2001, the solar industry has grown at a rate of 41% per year[17], with worldwide PV installations rising from 1.7GW to 2.8GW between 2006 and 2007.[18] This means that the amount of silicon demanded just from the solar industry increased from 17 million kilograms to 28 million kilograms in a year, and thanks to rising energy prices, fears of climate change, and the desire for energy independence, world demand for PV cells are projected to increase at similar rates for the next few years[19], pressuring silicon demand upwards.
Companies like First Solar and Suntech produce thin-film solar cells that use little-to-no silicon. Even makers of solar panels that aren't thin-film are working to reduce silicon use; SunPower, for example, uses 6.3 g/watt[20], and Evergreen Solar uses 5 g/watt.[21] As solar cell manufacturers adapt their panels to the high-silicon-price environment and reduce their use of the material, demand growth for it will slow.
Silicon Supply
The supply of silicon affects silicon prices in the opposite way of silicon demand. As supply rises, prices fall, and as supply falls, prices rise.
A Shortage of Refining Capacity is a Shortage of Silicon
Silicon is the second-most abundant element on Earth, making up 28% of the crust by weight[22], so silicon shortages don't happen because of shortages of the raw materials. To be used in semiconductors, however, silicon must have a purity of 99.99999%[23], and to be used in solar cells it must have a purity of 99.9999%.[24] Purifying silicon requires expensive capital equipment; a 1 million kg/year refinery owned by Sharp Corporation cost $40 million to build in 2007.[25] If yearly demand for refined silicon outpaces refinery capacity, as it did when the solar market started to expand in 2001[26], then there won't be enough of the stuff to go around, causing prices to go through the roof. When prices rise, however, silicon refiners have more incentive to invest in increasing production. Many analysts expect that by 2012, so much new refining capacity will have come online that there will be an oversupply, and prices will fall.[27]