Solar-power fever may not last: Japan's Tokuyama
TOKYO (Reuters) - The world's fever for solar power may not be sustainable and could be a bubble, an executive at Japanese silicon maker Tokuyama Corp said on Monday.
Tokuyama, the world's No. 2 maker of polycrystalline silicon after U.S. firm Hemlock Semiconductor Corp, is still gauging long-term demand for silicon used in solar cells, Managing Director Yukio Muranaga told Reuters in an interview.
"Demand for solar power will grow, but we really don't know by how much," Muranaga said. "It's too early to commit to more investment at this stage."
The global solar market, which some of Tokuyama's clients expect will grow by as much as 40 percent a year, depends on uncertain factors including how much governments such as Germany's are willing to subsidies solar energy use, Muranaga said.
Investors have criticized Tokuyama for falling behind in a capacity race against its rivals, who are betting that demand for clean energy and semiconductors in zippy gadgets will boost demand for polysilicon.
Polysilicon prices are 15 percent to 20 percent higher than a year ago and Tokuyama expects prices to rise further next year to reflect rising prices of raw materials.
Hemlock, nearly two-thirds owned by Dow Corning Corp, plans to more than triple annual capacity by 2010 to 36,000 tonnes of polysilicon, while Germany's Wacker plans to more than triple capacity to 22,000 tonnes.
That would mean the two companies would far outpace Tokuyama, which plans to raise annual capacity by 60 percent to 8,200 tonnes in the spring of 2009.
Until then, Tokuyama's sales of silicon are capped by capacity, even as wafer makers including Sumco Corp, Renewable Energy and MEMC Electronic Materials Inc are expanding solar wafer capacity and are desperate to secure more polysilicon.
WAITING FOR TECHNOLOGY
Tokuyama, which forecasts 0.8 percent growth in operating profit this year, sometimes has to turn down orders for 500 or 1,000 tonnes, said Muranaga.
Its shares have fallen 16.7 percent since January, compared with a 5.6 percent fall in the benchmark Nikkei average.
But Tokuyama, which supplies silicon to wafer makers such as SUMCO Techxiv Corp, is not about to rush into expansion.
Unlike Kyocera Corp or Sharp Corp, which are expanding solar cell production after spending decades developing solar technology, recent entrants don't understand how variable the market can be, Muranaga said.
Burned when the IT bubble burst in 2000, the company remembers having to halt production at a newly built plant as polysilicon prices fell by half. Continued...
