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The Rise of Korea's Solar Ambition

China and Taiwan together have been the world's key source for solar cells and panels. Now a long-time manufacturing rival is elbowing its way into the fray for a piece of the growing solar market.

The rival is Korea, and its keen interest in becoming a big solar manufacturing hub could give rise to a competitive landscape that is familiar to those in the semiconductor and consumer electronic businesses. Korean conglomerates such as Samsung and LG have long fought for market supremacy in areas such as chips, LCD panels and mobile phones.

The same intense competition could take place in the emerging solar market. Samsung and LG already are making solar panels, though not at the scale of some of their Asian competitors who also happen to be among the top 10 manufacturers worldwide. Just last week, a Silicon Valley startup, Stion, said it was getting a $130 million equity investment led by a group of Korean companies. The round, incidentally, also included those from Stion’s existing investors such as Taiwan Semiconductor Manufacturing Co.  

As part of the funding agreement, Stion said it will build a factory in Korea and invest $35 million into the new operation. The startup, founded in 2006, also plans to develop production equipment with AVACO, one of the lead investors of the new round and a seller of factory equipment for making LCD panels. Stion’s technology involves depositing a compound of copper, indium, gallium and selenium (CIGS) on glass.

The deal for Stion sounds similar to the investment deal another CIGS startup, HelioVolt in Texas, received earlier this year. HelioVolt received $50 million from SK Group and began looking to build a factory in Korea.

These investments represent a big bet by Koreans on a technology that has yet to go mainstream. CIGS thin film developers have promised to be able to deliver solar panels that can compete in price and efficiency against silicon solar panels, which have around 80 percent of the global market. CIGS technology development has largely been clustered in the United States and Germany, though the largest CIGS thin film maker is Japan’s Solar Frontier, which opened a 900-megawatt factory in early 2011.

Many CIGS startups have taken a lot longer to develop the processes for mass producing solar panels. They also have faced the difficult task of raising hundreds of millions of dollars to build a factory that is large enough to compete, particularly at a time when many investors in solar manufacturing have yet to earn the handsome returns they were expecting initially.

Two CIGS companies in the United States have turned to the federal government for loans. One of them, Solyndra, went bankrupt in September this year and caused a big uproar over its $535 million loan and whether the taxpayers will be able to recoup at least some of the money. Another one, SoloPower, recently raised more private money to complement the $197 million federal loan it received earlier this year to build a factory in Oregon.

Seeking investors outside of the usual circle of venture capital firms has become popular for these solar startups, which seek not only money but also technology development and marketing help to hopefully ensure their survival. One CIGS company, MiaSole, recently hired a new CEO and stated publicly its desire for a partner that could help it grow.

Korean companies aren’t just looking for solar investment opportunities in the United States. Hyundai Heavy Industries formed a joint venture with Saint-Gobain of France, and the two began building a 100-megawatt factory in Korea earlier this year. The factory will produce CIGS solar panels using technology from Saint-Gobain’s Avancis.

It’s too early to say whether all these new factory plans will help to turn Korea into a major solar manufacturing center. Chinese and Taiwanese companies such as Suntech Power, JA Solar and Motech Industries will certainly not be willing to give up their market dominance easily. New entrants into the market also have continued to crop up in these two countries.

For example, Foxconn Technology Group, the world’s largest contract manufacturer of consumer electronics, including Apple’s iPhone, is plotting its entry into the solar market, Bloomberg reported last week. Foxconn reportedly is planning a solar cell factory in China.

Taiwan Semiconductor Manufacturing also is getting its new 100-megawatt factory ready for the first commercial shipment in early 2012. The factory uses technology licensed from Stion. 

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