Nov. 8 (Bloomberg) -- The Hemlock Semiconductor Group, the world’s biggest maker of polysilicon, is increasing production as a glut for the material used in semiconductors and solar cells pushes down prices to the lowest since 2003.
Capacity will increase by 28 percent when a plant in Clarksville, Tennessee, starts working next year, said Jarrod Erpelding, a spokesman for the company named for the Michigan town in which it’s based. Prices for polysilicon have dropped 56 percent this year, Bloomberg New Energy Finance estimates.
Polysilicon has plunged from as much as $475 a kilogram in 2008 after Hemlock and its rivals Wacker Chemie AG of Germany and OCI Co. of South Korea lifted production to satisfy higher demand for solar cells. Price declines for the raw material gutted margins for panel makers and made the technology more competitive with fossil fuels.
“The hope is that the market does come back into balance over the next couple of years,” Paul Leming, an analyst at Ticonderoga Securities LLC, said yesterday in an interview.
He said Hemlock’s decision to build the plant was made when polysilicon prices were higher and that it would cost as much to stop production as to finish the factory because Hemlock already has signed contracts and purchased materials. The company is jointly owned by Dow Corning Corp. of Midland, Michigan, and the Japanese companies Shin-Etsu Handotai Co. Ltd. and Mitsubishi Materials Corp.
Hemlock, which has received $169 million in U.S. government tax credits, announced plans to build the Tennessee plant and expand its Michigan factory in December 2008, when polysilicon sold for $178 a kilogram. It now goes for $33.03 a kilogram, according to New Energy Finance.
Other companies are planning to increase capacity. LDK Solar Co., based in Jiangxi, China, announced plans to triple its capacity to 55,000 metric tons of polysilicon a year by 2014. GCL-Poly Energy Holdings Ltd., another Chinese producer, said in March it would more than double capacity to 46,000 metric tons this year.
About 90 percent of Chinese polysilicon factories may suspend output this month due to the slump, according to Xie Chen, an analyst who conducted a study of the polysilicon industry for the China Nonferrous Metals Industrial Association.
GT Advanced Technologies Inc., a supplier of silicon-making furnaces and reactors, today said some customers may delay receipt of equipment they ordered and lowered its sales forecast for its fiscal year.
Hemlock’s Tennessee plant will add 10,000 metric tons of capacity when it opens in late 2012, Erpelding said. The company currently has 36,000 tons of capacity at its Hemlock, Michigan, facility. Erpelding declined to say how much polysilicon the company makes or how much it sells for.
The company received the $169 million in tax credits in 2010 as part of the U.S. economic stimulus program, most of which were used to expand the Michigan plant.
“We believe over the long term the solar industry will continue to grow and that Hemlock Semiconductor will be well positioned to continue to play a leading role in supplying polysilicon,” Erpelding said in an interview.
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