Dr. Robert Castellano on how to make solar a'hot' sector again - 1

Last week, I was very fortunate enough to be able to get into a conversation with Dr. Robert N. Castellano, president of The Information Network, based in New Tripoli, USA. It all started with a column, which he writes regularly in “The Street.” One of the recent colums of Dr. Castellano touched upon –- What could make solar hot again?

This first part will touch upon issues such as six reasons for cloudy solar skies and how to rectify the current oversupply situation in solar cell manufacturing, status of a-Si solar cell makers, crystalline vs. thin film capacity, and impact of prices.

How to rectify the solar cell oversupply?
As I'd asked iSuppli too, in one of my recent posts, I also quizzed Dr. Castellano on whether the previously committed capacity expansions have caused solar cell manufacturing oversupply? Also, why had this happened and how could this be corrected?

He said: “The problem will rectify itself when demand catches up with supply, which will take several years. Until then, suppliers are faced with lower prices and margins. I was the first to point out on March 5 2008, in my blog on Seeking Alpha in an article entitled “Contradictions in the Solar Industry” that “The solar industry is faced with a huge oversupply of solar panels planned for production in 2008, but no one seems to notice… or care. Shares in many solar companies such as Evergreen Solar), First Solar SunPower, and Suntech Power have surged with the booming solar market.”

Six reasons for cloudy solar skies
He added: “On November 18, 2008, in another blog on Seeking Alpha entitled “Six Reasons for Cloudy Skies on the Solar Energy Industry” that the problems in the solar industry were the result of the following:

1. With oil at $60 a barrel, who cares about alternative energy? It is a short sighted view, but with the credit market crunch, who can get a loan to build solar plants anyway?”

2. The high price of oil in the past year was a catalyst for the development in other alternative energy sources, and not just solar! Advances in wind, geothermal and hydropower energy are reducing the cost of wind power to a point at which it is becoming competitive with traditional energy sources. Nuclear power plants -- smaller than a garden shed and able to power 20,000 homes -- will be on sale within five years, say scientists at Los Alamos, the US government laboratory, which developed the first atomic bomb. Among these alternative energy sources, hydropower and nuclear have the lowest carbon footprints (carbon dioxide produced during operation).

3. Spain, a huge buyer of solar, reduced its incentive program to aid buyers in 2009. In California, a seemingly green state, Prop. 7 was defeated in the November election with a whopping 65 percent of the voters saying NO. One reason: electricity consumers would pay 10 percent above the market rates for renewable power forever.

4. The spot market price of six-inch solar-grade wafers have fallen to $9 from a high of $12.50 in September. This bodes poorly for thin film makers and equipment suppliers. The thin film solar panel market and hence, the equipment market grew strongly because of the shortage of polysilicon. Now that polysilicon is abundant and lower priced, why make thin film panels with 8 percent efficiency when you get 16+ percent efficiency with silicon wafers?

5. “Utilization is at only 56 percent. Our analysis of 103 solar manufacturers shows that panel production capacity in 2009 will be 15 GW whereas only 8.3 GW will be sold.

6. The dollar has appreciated strongly against the euro by nearly 25 percent. Germany is the world's largest PV market. US solar companies have had to adjust selling prices to generate sales, reducing profit margins.”

Have companies been overlooking inventory problems?
In this context, weren't the solar companies doing enough to check all of these during the downturn of Q4-08? Even the 71 days to 122 days excess supply or inventory is huge!

Dr. Castellano said: “The solar companies were benefiting from the low price of polysilicon as a result of excess inventory in that sector. They were renegotiating contract prices with the poly suppliers and dropping prices. With money in place, they continued to build capacity well into 2009. All the factors discussed above took everyone by surprise (witness the stock market crash) and the recession has lasted much longer than initially forecast.

Where does this place a-Si solar cell makers?
How is all of this potentially setting the stage for the failure of multiple cell manufacturers, particularly those pursuing a-Si thin film solar cells?

He added that thin film cells are still less expensive to make and companies are working to improve their efficiency. Also, they appear to work at stated efficiency under lower incident light conditions.

“The issue is the economics in a solar farm where they are installed. The installation price is the same as a polycrystalline panel. Since the efficiency is lower and it takes more panels to reach the same wattage as polycrystalline, it also takes more hook-ups and frames during installation.

“If the panels move, there is another factor in the motors to move them. However, the production cost is lower than the polycrystalline panels. Oerlikon, expects its lines will deliver a cost of 70 cents per watt by the end of 2010 and has achieved an initial conversion efficiency of 11 percent, which comes out to about 9.5 percent of stabilized efficiency.”

Crystalline vs. thin film capacity
There is still a huge amount of solar cell manufacturing capacity in crystalline silicon solar cell, rather than thin film. Are there any chances of that starting to change any time soon?

Dr. Castellano said: “Until last year, Germany had been the world's largest solar market thanks to its feed-in tariffs, which require utilities to buy all the solar energy produced at premium, government-set prices. As a result, analysts now expect Germany, which doesn't have an annual cap like the one in Spain, to become the biggest market again in 2009.Germany installed 1.35 gigawatts of solar energy systems in 2008, and it could add another 1.5 gigawatts in 2009.

“Spain took the lead last year, but the government has since reduced the subsidies and capped the amount of energy that could be sold under the subsidy program. The financial market crisis has made it difficult for developers to line up financing for solar power projects. Spain, which added a few gigawatts of solar in 2008 alone, now has a 500-megawatt cap for 2009. All of these forces have led to an oversupply of silicon panels.

“As governments -- Germany and Spain were a driving force – in the solar industry’s run-up, they were a factor in the downturn. Once the recession is over and liquidity returns, they will mitigate the overcapacity, particularly as prices are so low and there is pent-up demand for new installations.”

Impact of Q4 on overall prices and industry
Another aspect worth examining is the overall impact of this (Q4) on overall prices and the industry.

Dr. Castellano said that silicon used to sell for more than $300 per kilogram on the spot market and $150 per kilogram for long-term contracts a few years ago. Silicon prices have since fallen significantly over the past year. In fact, the long-term contract price has dropped about 50 percent, close to the spot market price of $67 per kilogram, or about $0.50 per watt.

“Polysilicon panels are selling at $2.25 to $2.50 per watt from $4.17 in Q2 2008. We expect prices to decline further throughout the remainder of the year,” he noted.

In part 2 of this conversation, I will be discussing additional capacity in solar, new capacity in India, and of course, lessons to learn for the Indian solar industry. Watch this space, folks!

ISA, UK-TI MoU to develop semicon industry

Recently, the India Semiconductor Association (ISA) signed an MoU with East of England International (EOEI) to promote and develop the semiconductor industries in their respective domains.

On August 31st, which is early next week, the ISA and the UK-TI will be signing an MoU to extend this relationship further.

My colleague, Usha Prasad and I met up with Chandrika Anil, Manager – Membership Services, ISA, to hear more about the MoU.

Elaborating on how the MoU between the ISA and UK Trade & Investment (UK-TI) is going to help in encouragement and development of Global Value Chain Partnerships, Chandrika said that the ISA and the UK-TI share a mutual interest to promote and develop the sector semiconductor industries in their respective domains. The MoU between ISA and UK-TI entails promotion of the concept of Global Value Chain Partnerships.

As part of the MoU, the two organisations have agreed that:

* Global Value Chain Partnerships are of mutual benefit in the ongoing development of the Indian and UK semiconductor industries and the relationship between them.
* ISA and UK-TI will co-operate with each other in the following activities to encourage and develop Global Value Chain. Partnerships between Indian and UK semiconductor firms. This allows for:

1. Promoting the concept of Global Value Chain Partnerships amongst the Indian and UK semiconductor industries in the most appropriate manner
* This may include website, newsletters, conferences and direct discussion with firms.

2. Identifying, through ongoing research and discussion, areas of potential business opportunity which could be addressed by Indian and UK firms working together.
* These areas could form a set of themes around which ISA and UK-TI may wish to focus on seminars and other activities to raise awareness, understanding and interest.

3. Encouraging firms in the two industries to register (free of charge) their interest in exploring relevant partnerships and business opportunities in the identified areas
* This would involve inviting firms to provide information about their interests and capabilities, periodically reviewing identified opportunities which may be relevant.

4. Facilitating meetings between firms and groups of firms to take forward discussions with a view to formation of Global Value Chain Partnerships.
* The MOU will create a synergy between India and the UK in the areas of design, device and applications.

You can read more on ISA’s website. Thanks for the interaction, Chandrika, and well done, Usha!

Busy period ahead for Indian semicon, solar! While, TI bids for Qimonda’s tools!!

Yes, looks like it!

First, on August 31, the India Semiconductor Association and the UK-TI would be signing an MoU. The next day, September 1, there is a presentation by Ministry of New and Renewable Energy and key officials on the government of India’s policies to the industry!

Next, on September 4, the DIT Secretary R. Chandrasekhar and the Additional Secretary, will be interacting with semiconductor companies in Bangalore.

Further on, September 16 is the day when the Union Minister for New and Renewable Energy, Dr Farooq Abdullah, will be interacting with a small group of industry leaders at a solar PV conclave in Hyderabad!

That’s quite a lot, within a span of 15-odd days! Must say, this augurs well for the Indian semicon and solar/photovoltaics industry.

Interestingly, a lot of the big events are focusing on solar. So, my hunch is that the Indian solar industry may have some serious announcements to make in the coming weeks. Should that happen, I hope to bring those to you, time permitting.

TI bids for Qimonda’s tools
Oh, by the way, there’s news all over the Internet about Texas Instruments (TI) placing a bid of $172.5 million for Qimonda’s 300mm production tools from its closed DRAM fab. While this highlights TI’s focus on building the world’s first 300mm analog fab, I can’t stop wondering, what would have happened had an Indian investor really bought Qimonda!

State of the global EDA industry: Dr. Pradip Dutta, Synopsys

A few weeks ago, I was fortunate enough to be able to speak with Dr. Pradip Dutta Corporate Vice President and Managing Director, and Treasurer, India Semiconductor Association (ISA regarding the state of the global EDA industry and in India. What followed was a very interesting conversation, some of which is reproduced here!

Any sign of improvements in EDA?
To start with, the state of the global EDA industry is well knowm, and it has also seen revenue drops Q-on-Q in the past. Are there any signs of improvement?

According to Dr. Dutta, the last several quarters in the semiconductor industry have been extremely challenging as consumer demand for electronic products has declined with the heavy stress on the global economy.

"While we are starting to see signs of the semiconductor industry rebounding off the bottom with inventory replenishment and an uptick in end demand for key consumer items such as PCs and mobile phones, the environment is expected to remain difficult at least well into next year.

"During this time, the challenge for the semiconductor industry and its suppliers will be to find the next level of efficiency. The good news is that across a broad field of applications, semiconductors are a key enabler to future prosperity. Green solutions, low-cost netbooks, advances in connectivity and evolving products like the Kindle are just a few examples of areas that could help drive future development.

"The long-term ramifications of this scenario on the EDA industry are starting to become visible. More than ever, customers want to get their products out on time, and get it right with high quality.

"In addition to some immediate cost-cutting to respond to the crisis, most semiconductor and design businesses are re-focusing their market strategies, streamlining their operations, de-risking their supplier and partner relationships, and in some cases actively pursuing consolidation opportunities to drive economic efficiency.

"This situation presents as an opportunity for EDA companies to focus on important product developments that can enable leading semiconductor design and manufacturing companies to not only create more advanced devices, but to simultaneously lower risks and cut costs. In today’s economy, companies need to find ways to manage expenses while still investing in the future so they don’t just survive the recession, they emerge from it stronger."

State of the Indian EDA industry
Obviously, it would be interesting to see how is the Indian EDA industry holding up in these times.

Dr. Dutta said that the Indian EDA industry is a combination of catering to global semiconductor players and addressing the needs of a domestic market that is slowly developing. The global players that operate out of India are rapidly moving up the value chain in terms of owning and architecting the next generation chips. This leads to an enormous opportunity for EDA companies to get associated at the front end of tool decisions.

"As you are aware, the level of technology that is being witnessed in the chips that are getting designed here is absolutely bleeding edge. The EDA companies are therefore paying concomitant attention to robust application support and in-house R&D effort. It has to be a full package here and now to address these kinds of customer requirements.

"Beyond the global players, India is seeing a few, but committed fabless design companies coming up in recent times. In addition to that, the Indian government is showing a lot of interest in country-specific programs, primarily in defense areas that require EDA support.

"We have also recently seen media reports about an "India Chip" being conceived at the central government level for domestic security applications. The ISA is working toward a blueprint for targeting semiconductors into a national agenda and hopefully, many ideas for systems and corresponding chips that will emanate from it to keep EDA companies interested," he added.

Technology challenges facing EDA
I also prompted Dr. Dutta to touch upon the technology challenges that the EDA industry is currently facing.

He said: "The EDA industry has traditionally addressed challenges in delivering best quality of results and shortest time to market. These challenges are now joined by controlling costs that could spiral out of control without advanced automation.

"The advanced state of semiconductor manufacturing today has exacerbated and expanded these challenges to unprecedented levels. The complexity of chips has grown to 100s of millions of transistors. Just managing data of this size is a challenge!

"Power has emerged as the dominant constraint over the traditional constraints of speed and area. The progression of Moore’s Law has resulted in some deposition layers of only five atoms, and as a result, previously second and third order physical effects must be thoroughly accounted for, along with their interactions. Finally, the tiniest manufacturing variabilities can now have a significant impact on yield, and systemic yield issues must be accounted for in design with a strong tie between design and manufacturing.

"In verification, the cost of fixing a missed bug and the opportunity cost are very high. While verification has long been a bottleneck to getting product development done on time, we have recently seen the verification challenge really expand. Verification used to be about RTL verification and circuit simulation. Today there’s a growing focus on software-to-silicon verification, encompassing a full range of challenges that also includes embedded software, system validation and integration testing.

"On the design side, energy has become a big focus. Scrutiny is being placed on energy consumption at every level, including consumer and industrial electronics. EDA companies preparing for success beyond the downturn are developing end-to-end solutions that can help their semiconductor industry customers optimize designs for low power.

"The combination of increasing IC complexity and shrinking semiconductor features is driving exponential demand for design and manufacturing-related compute resources. IC design companies are looking for ways to easily maximize the throughput of their multi-core compute infrastructure and improve overall time to results. EDA solutions employing advanced parallel, threaded and other optimized compute technologies can help IC design companies boost performance and productivity and accelerate design throughput.

"Today's IC design landscape is characterized by escalating design challenges on the one hand, and enormous pressure to control costs and speed time-to-market on the other. IC design companies are relying on their EDA vendors to help resolve this dichotomy."

EDA in areas of modeling and photomask correction
How and where does EDA fit into the big picture, particularly in the areas of modeling and photomask correction? This, I believe is part of Dr. Aart de Geus’ vision.

Dr. Dutta highlighted that nowadays, semiconductor manufacturers face unprecedented challenges in addressing the fast-rising cost and complexity of semiconductor process development and manufacturing.

To fulfill the demand for lower cost and more functional products, successive generations of semiconductor processes are subjected to scaling and integration of heterogeneous device types -- such as core logic MOSFETs, embedded Flash memory and high-voltage devices -- that require substantial investment in fabrication equipment and wafer experimental trials to meet product requirements.

Moreover, once the new process enters manufacturing, it is critical to achieve high manufacturing yield as rapidly as possible to maximize or even ensure profitability for the products built on the new process.

To help overcome these challenges, semiconductor manufacturers increasingly rely on simulation tools to guide equipment selection and wafer experimentation during process development, allowing them to reduce development cost and time. In addition, they deploy computational lithography and mask synthesis tools in production to improve the resolution of the lithography process.

Accellera-SPIRIT merger and impact on EDA industry
Fairly recently, Accellera and SPIRIT announced a merger. How will this union improve the development of language-based and IP standards.

According to Dr. Dutta, the co-ordination of activities between Accellera and SPIRIT will be more powerful for future standards that should include increased focus on system-level design and verification. Accellera has always focused on language-based standards, while SPIRIT focused on IP usage. Combining the two for system-level design is a big win-win for all ESL users.

"We think that this merger will also spawn new products with consistent interoperability among multiple design paradigms. At Synopsys, we are facilitating interoperability through the recently announced System-Level Catalyst program. We think that the ESL design methodologies will be successful.

"In addition, a certain amount of overlap always exists between independent standards efforts. This merger will help minimize the duplication of certain overheads and facilitate consistent technical discussion between the two efforts."

In that case, will this union be now able to keep up with the various developments in higher process nodes?

He added that Wwith the migration toward more advanced process nodes, device counts will continue to increase. As a result of this complexity, the cost of managing design and verification will also rise. Therefore, new paradigms that leverage existing methodologies must evolve. Both, language-based and IP-based approaches have been successful so far.

"We expect that the Accellera/SPIRIT merger will create a new generation of standards enabling newer methodologies to deal with these complexities. While it is possible that a revolutionary approach will be developed in the future, it is likely that this evolutionary approach will appeal to most designers because it leverages the existing skill-set and infrastructure."


You can also read the full interview on ISA's web site.

STMicro on corporate responsibility -- Part 2

Friends, here's the second and concluding part of my discussion with Vivek Sharma, Director, India Design Center, and Vice President, Emerging Market Regions, STMicroelectronics.
Here, we have discussed how the company's corporate social responsibility has helped ST reduce greenhouse gases/reducing carbon footprint/CO2 emissions, handling e-waste and chemicals, and the company's success in developing 'greener and cleaner' supply chains.

Reducing greenhouse gases, etc.
First, How has this initiative helped reduce greenhouse gases/reducing carbon footprint/CO2 emissions?

Sharma said: "This Initiative has helped us in reducing greenhouse gases/ reducing carbon foot print/CO2 emissions. Although the semiconductor industry makes a relatively small contribution to climate change compared to many other industries, ST integrated a formal, structured approach to reducing its environmental footprint in the early 1990s.

"Working with the World Business Council for Sustainable Development (WBCSD) at that time helped us to define the areas for action and improvement relating to CO2 emissions and other greenhouse gases (GHG); we called the resulting 10-part plan our ‘Environmental Decalogue’.

"Some of the key strategies are constant dedication to reducing our own environmental impact by reducing our consumption of resources such as energy and water and our net emissions of greenhouse gases, working with our suppliers and other stakeholders to share our vast experience and encourage best practices, developing advanced devices that minimize the power consumed in electronic equipment.

"Power-conscious design has two aspects: reduction of energy consumption in the chip itself and contribution to energy saving in the end application, such as home appliances or lighting."

Some key highlights:
* A reduction in energy consumption per unit by 5 percent compared to 2007. This consumption now represents around 49% of its 1994 level, meaning that the energy saved each year is equivalent to the consumption of a town of 400,000 people;
* Outstanding progress in the reduction of CO2 emissions, which are now represent only 68% of what they were in 2005 in absolute value, despite a 4 percent increase in production volume over the same period.

Handling e-waste and chemicals
Since 1993, ST has been working on programs to reduce its hazardous substances consumption and improve the resulting waste treatment. "The evolution of our Decalogue helped us to successfully challenge our performance in these areas. Thus we have been reducing our chemical consumption by more than 5 percent a year, on average, since 1998," added Sharma.

Through corporate and local chemical saving plans, many initiatives have been implemented and shared across ST to outperform this goal, such as substitution of the most hazardous substances, chemical recycling, process optimization or hardware modification to dilute chemicals and lower their flow rates. In 2008, a focus was given to tend to the elimination of PFOs compounds in Front-end and the conversion to halogen free materials in back-end applications.

Impact on greener, cleaner products
According to him, for a semicondcuctor company, there are three key areas for directly contributing towards greener and cleaner environment.

First, to reduce consumption and waste. This has been already highlighted in terms of reduction of energy usage, CO2 emissions, chemical usage, eco footprint, etc.

ST intends to become environmentally neutral by 2012 utilizing other mechanisms like plating trees, using non conventional energy sources etc. as well to neutralize even the reduced levels of environment impact.

Second, to design products which help in reducing the energy consumption of end products. ST has already identified 4 fields where semiconductor components can help: stand-by, lighting, electric enginers, airconditioning and heating.

For example, ST’s green products like ST's microcontroller-based lamp ballast reduces the energy consumption by as much as 80 percent by using high-performing switching components to minimize the power losses. ST’s patented sensorless motor controller with inverter driving allows a microcontroller to control the frequency and voltage of the power supplied to the motor.

In white goods appliances and air-conditioning systems, this approach delivers real world savings of 30 percent compared to existing solutions. ST’s dedicated solution for refrigerators integrates full digital temperature regulation that helps maintain the internal temperature more accurately for better food preservation while saving power. With the incorporation of “start&stop” systems in cars, 15 percent of fuel can be saved.

Third, to design products which inherently consume less power. As an example, chips designed on our latest 45nm Low Power platform can have significant less power consumption compared to the standard platforms depending upon the configuration of the chip.

Developing greener, cleaner supply chains
Finally, how successful has ST been in developing 'greener and cleaner' supply chains?

According to Sharma, ST, being a full member of the EICC (Electronics Industry Citizenship Coalition), has applied its Code of Conduct to the operations and extended the proposal to suppliers and subcontractors. It decided to get involved in the EICC, to participate to a standardized approach to Corporate Responsibility management within the electronic industry supply chain.

"ST’s Corporate Responsibility department is responsible for deploying the Electronics Industry Citizenship Coalition (EICC) program. To manage the suppliers and subcontractors involvement in this initiative, it works in collaboration with the Purchasing and Sourcing department which has created a new central role in 2008 to manage the Quality and Sustainable Excellence programs.

"As we are among the first companies to launch this phase at the supply chain level, we decided to adopt a temperate approach. For the moment, our objective is to promote the EICC initiative rather than imposing it. Purchasing and Sourcing department managers have spent several months negotiating with each company to agree on subscribing to E-TASC and filling in the questionnaire for their main sites, and then to share their Corporate Responsibility performance.

"The spirit of the approach is to explain that as it is an industry initiative, if they complete the SAQ once, they will be able to share their results with other customers that might be EICC members too.

"In 2009, we will keep on inviting new companies to complete their SAQ and integrate these specific criteria in our suppliers /subcontractors performance evaluation tools (SPE)," he concluded.

STMicroelectronics on corporate responsibility -- part 1

STMicroelectronics recently launched its Corporate Social Responsibility Report -- said to be the first of its kind. I was fortunate enough to catch up with Vivek Sharma, Director, India Design Center, and Vice President, Emerging Market Regions, and find out more about this report. Here's what he had to say:

ST's concept of sustainable excellence
Corporate Social Responsibility has been the core belief for STMicroelectronics since its inception. In fact, STMicroelectronics is one of the first global industrial companies to recognize the importance of environmental responsibility and has won many awards for its pioneering work in this field.

The Company played a leading role in demonstrating that ‘Green is Black’ i.e. that environmental responsibility delivers real financial benefits and these goals are not in contradiction to each other. For building a culture on this core belief, all levels in an organization have not only to be involved, but also to ensure their commitment as well.

This was given a communicatble & practical shape when corporation adopted TQM principles in early nineties and its concepts, processes and practices were cascaded to all levels of whole enterprise. Soon after, company published its first ‘Environmental Decalogue’ in 1994 followed by another wave of TQEM.

In this journey, the company has continually widened the scope of its definition of corporate responsibility and increasingly formalized both the deployment of its principles within the company and the reporting of the results to stakeholders to ensure that it remains at the forefront of Corporate Responsibility.

ST’s Sustainable Excellence program was launched in 2007 to revamp the same core belief and to embed Corporate Responsibility into every level of the Company’s activities. The term reflects ST’s firm belief in its ability to balance stakeholders’ expectations to make the Company ‘sustainable’ – successful now and in the future – in the short and long term and enable it to contribute to sustainable development at a global level. This progam is based on three key principals i.e. Integrity, People and Excellence which captures the essence of it.

Why such a report now?
What's the need for such a report at this point of time? That's the obvious question!

Sharma said: "It is an annual report through which we intend to give an overview of our Corporate Responsibility strategy, our achievements at company and local levels and a description of the challenges we face in all areas of corporate responsibility such as environment, employee well-being, community involvement, and product responsibility while also demonstrating strong performance in aspects that are becoming increasingly important to stakeholders. This is a testimony to our commitment to CSR and it reports the progress track record on various fronts, hence demonstrating our accountability.

Progress in all areas
I asked Sharma to elaborate how ST was able to record continued progress in all areas of Corporate Responsibility.

As can be noticed in the report, we are able to make continued progress in all the areas. The key reason lies in the fact these CSR goals have been successfully deployed throughout the organization and we are able to generate high commitment to this cause.

As an example, the energy used per production unit has been more than halved since our pulishing of decaloque where in there was a target of 5 percent reduction every year. For us, Corporate Responsibility is a process of continuous improvement while adapting to a changing business environment.

On a regular basis, our company is evaluated by rating agencies and extra-financial analysts working with ethical indices or asset management companies, thereby ensuring that our practices are benchmarked with other leaders and this external evaluation has also direct impact on potential investors in the company.

"As outlined above, on annual basis we intend to give an overview of our Corporate Responsibility strategy, our achievements at company and local levels and a description of the challenges we face in all areas of corporate responsibility such as environment, employee well-being, community involvement, and product responsibility while also demonstrating strong performance in aspects that are becoming increasingly important to stakeholders.

"These include Health & Safety of our employees, diffusion of Corporate Responsibility in the supply chain, implementation of human rights,responsible restructuring etc. apart from economic results," he said.

Benefits of the concept
Next, I asked him to elaborate on the short-term and long-term benefits of this concept.

Although CSR focus is well understood to yield sustained results over long-term, it very well offers numerous short term advantages. Simply, short term results achieved without compromising CSR principals would yield sustained long term results. Let us take a relatively obvious example, keeping employees healthy and safe, providing them good work life balance etc. can deliver high quality results in short term whereby ensuring their long term sustainability.

Although, all examples may not be so obvious and rather sometimes can even be very challenging to arrive at the balance, nevertheless these principals provide guiding direction This helps building aligned expectations from stakeholders.

"Let us take another example in the area of environment and product responsibility. The short-term and long-term benefits from this concept would be seen in various areas such as power applications in our homes, from lighting, heating,air-conditioning, white goods appliances and entertainment electronics.

"Replacing traditional incandescent bulb lamps with compact fluorescent lamps (CFL) cut energy use by a factor of five, using advanced motor control technologies for energy efficiency, silent operation etc. can brings down energy consumption by as high as 40% and noise levels as well. In short term, electricity bills come down and in long-term this helps in conserving the environment as energy needs go down.

Involvement of ST India
It would be interesting to find out a bit about the involvement of ST's Indian arm in all of this.

Sharma said: "ST’s India operations are seamlessly integrated into ST corporate culture hence embody the CSR initiatives with equal vigor through structure, systems, processes & practices, while also taking into consideration local realities.

"As a matter of structure, locally we have Sustainable Excellence Committees, Ethics Committee and employees’ voluntary committee known as Community & Environment Support (CES). As an example of processes, Sustainable Excellence Operations Review is carried out every quarter with SE committee.

"Being a major Intellectual Property design center, quality and timeliness of the products developed has an impact on the economic results of the company. To strengthen these, various training programs, both corporate and local are deployed along-with strong practices e.g. project management.

"The sites are ISO/TS certified to ensure these. Further, a design center is a key place to ensure high energy efficiency of semiconductor products. As an example. our local teams are developing Low Power design platforms in latest technologies e.g. 45nm, 32nm, on which semiconductors chips are designed and which can help in bringing down the power consumption as high as 30 percent.

"Chips and embedded software are also designed to consume less power e.g. Set-Top-Box System-On-Chip solutions. The sites are certified to latest information security standard of ISO 27001.

"On the social front, the company’s health program is fully deployed locally as well. In the last one and a half year, more than 85 percent of our employees have undergone health check. There is continuous series of health talks on the local sites from medical specialists.

"Even though, Greater Noida is a design center, hence less changes of employee safety issues as compared to manufacturing plants, it is OHSAS 18001 certified to keep the high standards. Also, regular employee engagement surveys are done to ensure high level of employee motivation."

Another corporate program, under the aegis of ST Foundation namely Digital Unify, intended to bridge the Digital Divide is being pursued strongly locally. Already 9 labs have been opened in Indian schools where students don’t have access to computers and internet. The basic infrastructure comprising of computers and associated hardware along-with training is provided here. So far, more than 2,000 students have been trained with the goal of doubling this number this year.

"In order to extend good practices in the supply chain, we invite our suppliers to agree on the Business Ethics principals. As a local initiative, we systematically inform our suppliers not to offer any gifts to any of our employees/decision makers in order to ensure no conflict of interest and high business integrity.

"Under the environment focus, first and foremost need is to spread the awareness about the environment challenges world is facing. Time to time, events are organized e.g. Environment Week in June this year, wherein environment related movies are screened, stalls are put-up like CFL/LED bulbs, painting competition and quizzes on environment are organized, NGOs are invited to interact with our employees, plant saplings are distributed etc.

"Being non manufacturing units in India, although, there is no direct pollution, however, reduction of waste in various forms remain under focus e.g., energy/water/paper consumption, food wastage etc. In order to optimize transport related pollution, we have deployed 38 buses running on CNG, which carry more than 80 percent of our employees at Greater Noida," noted Sharma.

I will continue my conversation with Vivek Sharma in the next post.

There, we will be discussing how the CSR strategy has helped ST reduce greenhouse gases/reducing carbon footprint/CO2 emissions, handling e-waste and chemicals, and the company's success in developing 'greener and cleaner' supply chains.

Top 10 telecom trends for 2009 -- more of the same!

Friends, I had written a post on TelecomYou way back on December 30, 2008. Interestingly, nothing really has changed as far as these top 10 telecom trends are concerned.…

I've been thoroughly bored with developments in telecom... and 2009 promises to be boring -- actually, steady, with more of the same!

Don't look around for too much of innovations though!

1. WiMAX vs. LTE -- when will this debate get over and done with?

2. Growth of 3G services in places where it hasn't taken off or started!

3. IPTV -- well, it needs to catch up and grow substantially.

4. More of GPS enabled devices as mobile navigation attempts to grow stronger.

5. Near field communications. A report elsewhere on the web talks also about NFC phones starting to roll out in Taiwan.

6. Further adoption of femtocells... hope the Forum does much, much more in 2009.

7. Embedded Internet devices.

8. Carrier Ethernet should gain steam.

9. More of mobile VAS and mobile Web

10. More of mobile OS wars.

Now, I wonder, what happened to the following, or what's the status! These were supposed to be hot not so long back!

1. OFDM
2. VCSELs
3. TD-SCDMA
4. MIMO

Well, do any of you, my friends, see anything different happen? Would be glad to hear about those!

Consolidation likely in solar cell manufacturing to control oversupply, and, lessons for India!

Thanks to Jon Cassell and Debra Jaramilla, I was able to get in a conversation with Stefan de Haan, senior analyst, iSuppli Corp., regarding the global solar PV industry. Recently, iSuppli had provided guidance on how "Half of all solar panels made this year won’t be installed in 2009!"


Correcting solar cell manufacturing oversupply
Previously committed capacity expansions have caused solar cell manufacturing oversupply. Why and how can this be corrected?

According to Stefan de Hann, the cell suppliers are already reacting, i.e., cutting back on production and delaying expansion plans. Nevertheless, a consolidation will take place, since prices won't recover. Production cost is the key to be among the survivors. However, 2009 will see the peak of the cell/module oversupply. From 2010 on, the situation will ease slowly.

If that were the case, weren't the companies doing enough to check all of this during the downturn of Q4-08?

de Haan added that at the end of last year (record year 2008!), everybody still expected continuous strong demand. "It took most companies longer to realize that their enormous growth expectations were not realistic. We were the first to predict the current scenario already in summer 2008, but the nearly all the companies I talked to at the PVSEC in September 2008 didn't share this view at all."

So, therefore, they probably weren't checking their market carefully enough, after all!

Failure of a-Si thin film solar cell makers?
Is all of this setting the stage for the failure of multiple cell manufacturers, particularly those pursuing a-Si thin film solar cells?

According to the iSuppli analyst, those suppliers relying on standard a-Si thin film lines [AMAT/Oerlikon] will definitely face problems for several quarters. "Collapsing polysilicon prices incease the pressure on these manufacturers. There will be not only excess crystalline cell production, but also excess a-Si production," he added.

There is also a huge amount of solar cell manufacturing capacity in crystalline silicon solar cell, rather than thin film. When will this start changing and why?

de Haan advised that both crystalline and thin film production (and installation) will continue to grow for the next years. Due to lower production costs, thin film will increase its market share gradually. In iSuppli's current projection, it sees a thin film market share of 35-40 percent in 2013, up from 15 percent in 2008.

Lessons for India?
With consolidation likely to happen in the global solar cell manufacturing industry to control or combat oversupply, where would it all leave the the talk of building new capacity in India? As we know, back home in India, various companies are betting big on this sector.

In this regard, what are the lessons to learn for the Indian solar PV industry? Bear in mind that India is a "wild card" as far as solar demand is concerned.

According to de Haan, Companies hope for huge investments in the coming years and want to be prepared. However, in the current oversupply situation, the comparatively new Indian cell and module manufacturers will suffer from dropping prices.

He advised: "For them it is important to stay flexible with regard to polysilicon and wafer purchase. These prices won't recover either, no need for long-term commitments. Most importantly, they need to develop their domestic market. If I was an Indian module manufacturer, I would integrate downstream and enter the installation business."

AqTronics-Mouser eye growth opportunities for components distribution in India!

Bangalore based AqTronics Technologies Pvt Ltd is an innovator in the distribution and marketing of semiconductors, passives, interconnects, electro-mechanical, IT and enterprise products. It is a focused demand creation distributor for India markets.

According to Ranga Prasad, business development manager, AqTronics, the company desires to be a part of the technology supply chain for customers in India.

He said: "We would like to bring the latest technologies to India and provide an exemplary standard of quality service through superior product marketing, outstanding technical solution support, in-depth inventory, professional selling procedures and the most reliable operational systems in distribution."

AqTronics to distribute Mouser's components in India
AqTronics recently entered into an agreement with Mouser Electronics Inc., a leading global distributor of electronic components.

Under the agreement, AqTronics will distribute Mouser's electronics components in India. All of Mouser's components are available through AqTronics through INR (Indian Rupees) and USD (US dollars) with Modvat refund.

Mouser Electronics is one of the fastest growing global catalog and web based distributors in the electronics industry. The company is focused on the rapid introduction of newest products, leading edge technologies, and world class customer service.

It is specially focused on design engineers and buyers demanding small to medium quantities of the latest products. Hence, Mouser provides customer-focused distribution.

Mouser is also an authorized distributor for over 390 industry leading manufacturers. With a new catalog every six months, it ensures that the newest products are added and the end-of-life products removed from the print catalog. Mouser’s website features over a million products for easy purchase in USD, INR and with Modvat refund through AqTronics.

USP of AqTronics-Mouser relationship
Ranga Prasad says: "AqTronics' focus is demand creation distribution. This calls for supporting customers on the complete product development life cycle (PDLC)."

Mouser Electronics will help AqTronics will support customers for -- functional engineering, embedded development tool selection, bread board to engineering BOM, prototyping with small quantities, and NPI or pilot production – broken pack (Non MoQ, non MoV).

Components distribution and India advantage
Estimating the global components distribution market, according to Mouser, the semiconductor markets globally are estimated to be $1.2 trillion.

The Indian market share in percentage terms is said to be lesser than 2 percent of the world TAM (total available market). According to the companies, this calls for tremendous growth opportunities for components distribution in the Indian market.

Naturally, the India advantage comes into play!

India, with the second largest population in the world, and a huge talent pool of engineers, is a promising market. Especially, in the R&D activities, there are a lot of technology companies in major cities such as Bangalore, Chennai, etc.

Mouser will focus and continue to put an effort into developing this market. Mouser is very excited about the growth in the Indian market and the opportunity to bring its world class product line card to the region.

AqTronics' strategies to tap Indian market with Mouser
AqTronics and Mouser have aggressive plans for the Indian market.

According to Ranga Prasad: “Mouser will re-inforce resources in India by increasing its presence through partners, e-marketing through the Internet, e-magazines and appropriate search engines. Mouser's focus is on bringing the 'newest parts for the newest designs', and ensuring that the engineering community is best served with all of the latest parts.

“To support this, AqTronics, and also Mouser, will update their website daily with new parts and components from over 390 major manufacturers. There will also also be a fully updated catalog in India every six months.”

Warehouse in pipeline
Entering India in the electronic components space also calls for having a dedicated warehouse at some point of time. Since customer support is one of Mouser's strength, the company is serious in its approach toward India, and will provide its best services for after sales support.

Putting appropriate resource to support customers is Mouser's belief. Therefore, it will not neglect the needs of adding a warehouse wherever and whenever required. It also partners with FEDEX for international operations and has a three-day shipping from Texas, USA, to its customer base in the region.

Companies represented by AqTronics
AqTronics represents the following companies:

Mouser Electronics: Catalogue sales distribution.
Digi International: Leaders in device networking and M2M.
SST: Serial/parallel Flash, NAN drive (solid-state drive), 8051 microcontrollers.
ISSI: Synchronous SRAM, DDR-II, asynchronous SRAM, DRAM, automotive and industrial versions.
Fujistu: Thermal printers, interface boards, touch panels, Bluetooth modules.
Upek: Capacitive type -– large area, swipe sensors, controllers, RSA tokens.
Ember: Zigbee chipsets.
ORing: Ethernet switches.
Sarantel: GPS Geo Helix antennae.
iWatt: AC/DC ICs, DC/DC ICs, Advance power solutions
Tysso: Magnetic swipe readers, keyboards, bar code readers/scanners, POS systems.
Everlight: LED lighting solutions.
MPS: Monolithic power systems -- regulators, low drop regulators, battery, chargers/protection, transformer based power supplies.
Narda Batteries: Batteries for telecom, UPS, power, solar energy, emergency lighting and power systems, mobile communications, radio, railways.

Taking on competition
India is also home to leading electronic components and distributors, such as Farnell. Contending with such stiff competition is key on the agenda.

Ranga Prasad adds: “In addition to the strategies mentioned earlier, we would like to re-inforce and strengthen our relationships with the universities' research teams, and ensure that the engineers are aware of Mouser's services and support when they are still in the universities.

“Mouser's focus is driven by ensuring that the latest components are always available. Its stock profile is focused on electronic components, and not on other peripheral ranges.”

MindTree's intelligent video surveillance system -- a bit late, but has potential!

Recently, MindTree launched its Intelligent Video Surveillance System (IVSS). Though it seems to be a bit late in the market, the solution has tremendous potential.

Video surveillance globally is said to be a $13 billion market. In India, there has been a huge budget allocation for security worth Rs. 33,000 crores. According to MindTree, its focus is on intelligence, and that would be the company's differentiator in the years to come.

Technology drivers for such devices include -- a move from analog to IP; from networked to distributed; intelligence and analysis; use of allied technologies and standardization.

According to MindTree's Sharmila Saha, the company wants to become an end-to-end solution provider. Its main value proposition is to bring management and analytics into all of its solutions. MindTree also has a enterprise ready hybrid product that supports both analog and IP cameras. It is starting ready to manufacture/IP licensing products.

Commenting on typical IVSS market and its characteristics, she said these included:
* public infrastructure, defence, educational institutions, etc.,
* financial institutions, retail, enterprise and home,
* server-based storage (networked video recording), and
* server based analytics.

MindTree's differentiators are said to be the following: video analytics -- the solution allows searching metadata, bandwidth management, security managenent -- including tamper detection, video watermarking and secure transmission of data; and deployment -- MindTree is also going standard compliant, supports multi-vendor devices, and offers customizable solutions.

Let us take a look at some of the features of MindTree's solutions. Users can certainly do PTZ remotely, and also set camera in the patrol mode. Digital zoom is yet another feature. Image detection is done at 30fps. Image stiching is yet another feature available.

Searches can be done based on both time and data. There is also an events browser. Schedule recording can be performed by setting certain rules. H.264 is used for compressing images. MindTree has also built in face detection and face recognition as part of its video algorithms, besides Virtual TripWire.

S. Janakiraman, President and Group CEO, Product Engineering Services, pointed out that several other algorithms are being developed at the Indian Institute of Science, Bangalore. Another algorithm -- image stitching -- has been developed by MindTree.

The company is filing the patent for image stitching, as well as for face detection. MindTree can control the storage and network costs since its own algorithms are being used. According to him, the company is in talks with the defence, etc.

MindTree's network surveillance system helps an existing analog surveillance system to migrate to a centralized and IP based video surveillance system while still exploiting the investment on the analog infrastructure.

Built modularly, the IVSS comprises of multiple components that can also be used individually to increase operational efficiency. OEMs can leverage the reference design from MindTree for creating their own hybrid DVRs and system integrators can use the ready-to-fit solution accelerators and components to provide more robust and flexible surveillance systems to end customers.

IVSS key components
* Digital Video Recorder (DVR)
* Network Video Recorder (NVR)
* Video Management Solution (VMS)
* Video Analytics Algorithms Suite (VAAS)
* Analog-to-IP Encoders
* Smart IP Cameras

Key features of IVSS system:
* Video analytics with distributed intelligence to trigger specific actions on alerts and alarms.
* Intelligent video mining to extract valuable information from raw feed quickly and efficiently.
* Bandwidth management to reduce IP bandwidth requirements for feed transmission.
* Single management station that is scalable for future requirements.
* Reliable alarm management that is configurable for any event.
* Multi-camera tracking for specific objects through multiple cameras.
* Enhanced security features including watermarking and tamper protection.

Global semicon sales forecast results: Cowan LRA model

Friends, carrying on with my coverage of the fortunes of the global semiconductor industry, here's the global semiconductor industry sales forecasts, by Mike Cowan. First of all, I would like to acknowledge Mike for sharing his findings and thank him for his continuous tracking of the semiconductor industry.

The just updated global semiconductor sales forecast estimates based upon the recently-published June 2009 actual sales number released last Monday by the WSTS (posted Aug. 3, on its website).

The table below details the latest, updated forecast numbers covering the next six quarters, that is, from 3Q09 through 4Q10, respectively.

As shown in the table the latest update to the year 2009 sales forecast estimate increased by +1.4 percent to $198.9 billion (compared to the previous month's sales forecast estimate of $196.2 billion).

This updated 2009 sales forecast estimate corresponds to an yr-o-yr sales growth forecast estimate of -20 percent, which represents a slight improvement compared to last month's sales growth prediction of -21.1 percent.Sources: Actuals => WSTS; Forecasts => Cowan LRA Model (August 2009)

It should be highlighted that June 09's actual YTD sales ($95.927 billion) growth (compared to last June 08's actual YTD sales of $127.508 billion) came in at -24.8 percent indicating that the model is projecting an improvement relative to today's 2009 actual YTD sales growth number, for the end of the year.

Remember that the model is dynamic, that is, is recalculated each month as the year plays out; and therefore today's updated full year sales growth prediction will not sit still but will evolve over the coming months.

Finally, the model also provides a sales forecast estimate for next month, namely for July. Thus, July's (actual) sales forecast estimate is projected to be $15.221 billion, which corresponds to a 3MMA sales forecast estimate of $16.930B as normally published by the SIA.

In addition to running his forecasting model each month, Cowan also "keep tabs" on a wide range of other semiconductor industry watchers (including both WSTS and SIA bi-yearly forecasts), thereby tracking what their respective predictions are for 2009's sales growth (compared to 2008).Source: Mike Cowan

The table (as well as distribution graphic) summarizes (pictures) the 2009 sales growth forecast estimates for 21 other market researchers (besides Cowan himself).

As shown in the table, ongoing revisions for each market analyst are listed along with the latest updates over the past month -- three during this time period -- highlighted as (<== UPDATE).

As is evident from surveying the numbers for the group included in the table, the most update 2009 sales growth predictions range is relatively broad but with a strong "central tendency" hovering around a decline of approximately 20 percent (six forecasters).

Cowan has also "extended" the model for an additional quarter (that is, through 4Q10) in order to get a preview of what the model had to "say" about a sales (and sales growth)forecast for the full year of 2010.Source: Mike Cowan

Thus, as shown in the table above -- see the bottom three rows of (underlined) numbers -- 4Q10's sales forecast is projected to be $54.853 billion and the full year 2010's sales forecast is forecasted to come in at $214.925 billion, which yields a 2010 year-on-year sales growth of 8 percent.

It should be mentioned that the WSTS's and SIA's 2010 sales growth forecasts are projected to be 7.3 percent and 6.5 percent, respectively. Therefore, looks like the model's 2010 sales growth forecast is slightly more bullish than the two industry organizations' forecasts reported back in (the beginning of) June, 2009.

What needs to be done to boost chip designing activities in India?

Anil Gupta, Technovation 2010 and UK CIG Convener, India Semiconductor Association (ISA), also needs no introduction. As former managing director, ARM Embedded Technologies Pvt. Ltd, he has been a prominent figure in several industry events. Here, he presents his views on what needs to be done for the Indian semiconductor industry.

An interesting fact being brought up time and again within the industry is the requirement of a robust entrepreneurial spirit and the need for much more sources of funding for semiconductor product companies. Also, renewable energy, healthcare and security are some of the verticals where the Indian industry believes there is a lot of value to be added from the Indian market/need perspective.

Further, local products/systems design and development activity needs to be encouraged and kick-started in a big way in India, for the industry to really succeed big time!

What does Indian semicon need?
We have discussed several times in the past regarding what needs to be done with the Indian semicon industry. So, what really needs to be done, given the current slowdown? What can be done boost chip designing activities in India.

According to Anil Gupta: "The Indian story has always been a story of a lot of potential, but most often this potential is never realized.

"The software industry has done well and has gone far, perhaps, somewhat farther than the hardware or chip-design industry in India. However, you still don’t see a software product conceptualized, designed and developed in India that is worth mentioning.

"The Infosys’es and the I-Flex’es can do a phenomenal job of executing software projects for their customers, but they are all a far cry from the league of the top consulting firms that define the problem to be solved and the software solutions to be built.

"The Indian software industry is still plagued with the “revenue per head” model and is unable to grow beyond it. The Indian software companies clearly bring a significant value to their customers but this is NOT strategic value, it is merely an execution value.

"Compared with the software industry, the embedded systems industry in India is puny today. However, the opportunities are phenomenal because there is so much automation potential in so many verticals. However, once again, the lack of significant products/solutions development in India is a very big hindrance."

From a technical expertise perspective, there is a lot of engineering talent available, but the expertise is in general quite shallow. Even in the open source space like Linux, there aren’t many noteworthy contributions to date from the Indian engineering community.

Is the Indian fab story truly dead and buried?
In the past, we have extensively discussed whether the Indian fab story was dead and buried. Do you see any change in the current situation?

Well, it is dead for now! Gupta added: "Its day will come ONLY when the economics works out in its favour. Today, it doesn’t!"

He said: "It is interesting that many point out to the success of the solar fab investments. However, it should be noted that there is no solar wafer manufacturing activity worth mentioning. Only modules are being assembled in India as there seems to be a global glut in wafer production. Thus, wafer fabs in India is a pipe dream for now since the economics doesn’t work out."

Does India have entrepreneurs committed to product development and willing to take that risk? How can they be encouraged?

Gupta said that there are not that many who are willing to come out and take the risk, and the lack of funding is a very big handicap. The lack of prior successes that could be emulated is probably the biggest handicap.

In that case, what needs to be done in India to move up a higher level, beyond design and verification?

He said: "Clearly, a willingness to take risk, strong stomach to face failure, and strong will to learn from that failure to rise again from the ashes!"