Service-based economy pressures suppliers to semi, solar markets

Joe Cestari, president of Total Facility Solutions, discusses how the transitioning of the economy in both the semiconductor and solar manufacturing industries from a product/hardware-dependent business, to a service-oriented model is exerting enormous pressures on suppliers.

August 8, 2011 – In a post-SEMICON West podcast interview, Joe Cestari, president of Total Facility Solutions, discusses how the transitioning of the economy in both the semiconductor and solar manufacturing industries from a product/hardware-dependent business, to a service-oriented model is exerting enormous pressures on suppliers. The effect of this transition can be seen in the semiconductor industry, says Cestari, where the industry has been building more and more complex devices for an end market that has continued to drive down prices. Similarly, in the solar market, the selling price of the devices is being driven down to levels below what the substrates they are built upon cost.

“What’s driving us today is social media and ubiquitous mobile computing,” said Cestari.
“In most cases, consumers are paying little or next to nothing for the services.” He says that the folks making money are the ones that supply, transform, and provide access to data. “Those of us in the business of installing infrastructure or making devices are pressured from all angles because of this service-based economy.”


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On the topic of supply chain dynamics, Cestari explains that there is a very different supply chain in 2011 than the industry has ever experienced before. “The economic impact on materials, on availability of inventory, and on the ability of smaller companies to spend enough R&D dollars to keep up with the pace of what we see in terms of technology nodes in both markets is very challenging,” he said. The company has to take on a lot of risk: “We can’t afford to have a serial process as we might have done 5-10 years ago,” he explains The company also has to build facilities in half the time for a lower cost — larger absolute dollars, he notes, but relatively it’s still a lower cost.

In the interview, Cestari also addresses regional differences in work rules and codes, as well as the impact that legislation has had on the building of solar installations. Despite the challenges, the company’s outlook is very good as it has 4-5 major semiconductor projects in the US in the next 18-24 months. And while there is a lot of activity in solar farms in the US, there is very little when it comes to projects that increase the capacity of solar cells and modules.

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