Daniel Englander

Melting the Ingot with Bob Ford, CEO of Solaicx February 28, 2008 at 2:02 PM

Solaicx is a venture-backed startup hell bent on reducing costs in the PV supply chain. Since breaking ground on their new Portland, OR, factory in November, the company has worked ’round-the-clock to stabilize their innovative wafer manufacturing technology, with an eye towards full-scale commercial production in the first half of 2009. Solaicx was also one of Greentech Media’s top ten startups.

I had the opportunity to talk with Bob Ford, the company’s CEO, a few days ago about his company’s progress, supply issues in the PV market, and the possibility of a solar shakeout.

Bubbling silicon, after the jump.

For the past few years Solaicx has been locked in an epic battle with the global solar-grade silicon market. “When does the silicon market start to become more rational?” asks Bob. “We’ve had a period of a few years where the market has been irrational. This brings us to the essence of what tripped up Suntech.” This also brings us to the essence of where Solaicx is going.

Bob’s company is a triple threat to the global silicon shortage, attacking it through low cost production, better supply utilization, and a higher quality output. Solaicx’s “whole process is about cost reduction” that “directly attacks the grams per watt.” I’m thinking I’ve heard this tune before. But hold on – Solaicx might be on to something here.

Instead of relying on the traditional batch processing method for silicon wafers, Bob and his team have developed an innovative continuous processing method that achieves “far higher throughput on an equal footing basis – producing 4 or 5 times more than the average grower.” The spice in Bob’s special sauce is a “continuous Czochralski” grower. Despite sounding like a dangerous figure skating move, the continuous Czochralski actually eliminates “a lot of the dead time that the batch crystal growers have,” allowing Solaicx to produce thinner wafers at a faster pace than traditional growers.

Bob tells me many larger companies have tried and failed at building a continuous ingot processing technology, though for lack of imagination, not lack of capital. Solaicx “started with a clean sheet of paper instead of starting with a batch crystal grower. [They] designed the crystal grower around the needs of the solar industry, instead of rebuilding a semiconductor model.” Bob says Solaicx decided “in order to have a sustainable, competitive advantage we needed to build our own.”

The Solaicx team “has been very fortunate to create some good relationships,” Bob tells me. How good? Well, while Bob wouldn’t disclose his customer list, he did say there are 15 top producers in the industry and “we’re talking to eight of them.” Currently Solaicx is “getting its feedstock from customers. As a venture capital funded company it would have been foolhardy to expend capital on buying long term contracts,” though Bob hasn’t ruled out buying into the feedstock market after some long-term growth.

And when will that be? Bob says “the first thing we’re doing is stabilizing our manufacturing process. We’re using the eight crystal growers to support that. This is probably an additional three-month process. Once that’s done, it’s a race to scaling up.” He expects that to happen in “the first half of 2009.” For Solaicx “in the short-term it’s about getting our wafers into customer’s hands” to position the company to “make a very good margin selling at a commodity price,” which Bob thinks the company can already do. In the near term, Bob says “we have the ability to sell everything we’ve processed through our growers.”

Perhaps the most significant news coming out of Solaicx in the past few months was their decision to open a full-scale production plant in Portland, OR. Aside from good beer and bad weather, the Solaicx team was drawn to Portland because it has “the highest concentration of skilled workers, with 4 or 5 crystal growing operations” already working in the area. Bob also cited Oregon’s Business Energy Tax Credit as a primary factor, because the BETC “is an incentive we can monetize.”

At the end of the day, Solaicx seems fairly well positioned to come out ahead once the solar industry cools down a little. Bob thinks “that over the next three to four years there’s going to be a settling out in the industry. You’ll have some entrenched players, and we want to be an entrenched player.” In Bob’s view “there are two sets of dynamics riding on the silicon market: there’s a lot more capacity coming online… the other part of the equation that’s not getting a lot of recognition is the reduced grams per watt. I think you’ve got a 45 percent reduction over a five-year span.”

Ultimately Bob thinks “grid parity could happen by 2011 or 2010. And part of that is getting silicon back into rational pricing. As silicon becomes available, we’ll switch back to a merchant supplier.” But, according to Bob, “it’s not going to be silicon that’s going to constrain the industry in the short term, but other issues. Graphite, crucibles. Value segments and their ability to deploy and keep up with the pace. We’re not talking about a mature industry where every factor is balanced.” As the market progresses, however, “the lag between market producer recognition of the need for more capacity and the amount of time it takes to build more capacity will start to shorten.”

In the meantime, Solaicx will focus on adding to the $43.9 million in VC they’ve raised so far by looking for “some less costly capital in the second half of 2008.” Following that, I’d keep my eyes peeled for Bob Ford to debut the double continuous Czochralski at the 2010 Olympics.

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