Polysilicon Shortage to End in 2008

It was estimated that the demand for silicon feedstock neared 26,000 tons in 2004, with a nearly 7 percent rise in wafer production by 2005. However, this increase was not sufficient to keep up with demand. In 2006 the shortage of feedstock reached a critical point, affecting the production of solar panels and consequently growth, Frost says.

The four largest polysilicon producers are expected to add more than 17,000 tons of capacity in 2008, an increase of than 50 percent over their current capacities. While demand from the semiconductor industry is also expected to grow at steady one-digit rates, solar-grade polysilicon is expected to reach over 50% of the total demand for high purity silicon in 2008-2009, the report from Frost says.

"The majority of the new quantities will be supplied to the market by top four producers that are expanding their existing production capacities. Since these companies are well-established in the industry and have accumulated many years of experience, they have quite a short ramp-up time for the new plants. We can expect them to start the production on time and stick to their announced schedules," said Alina Bakhareva, renewable energy program manager at Frost & Sullivan.