Trina Solar has opened a new front in the battle for solar-grade silicon.
On Tuesday, the China-based solar-panel manufacturer announced it has hired Dave Seburn, an REC Silicon veteran, in the newly created role of vice president of polysilicon. Trina also appointed Anthony Chia, who previously worked at Sanmina-SCI and at Motorola, as vice president of quality and announced its vice president of technology, Mohan Naranayan, left the company for "personal reasons."
But the polysilicon job title is appealing because, aside from being remarkably direct (note the lack of marketing jargon), its creation also heralds a mighty charge to tackle the industry's biggest obstacle.
Trina Solar (NYSE: TSL) has been a ready example of silicon-shortage suffering. The Changzhou, China-based public company saw its second-quarter net income quintuple over the same period last year. But its gross margins slid from 27.5 percent to 18.9 percent during the same time.
Like many newcomers to the solar energy industry, Trina's feeling the squeeze from the global shortage of solar-grade silicon, also called polysilicon (see Silicon Steals the Spotlight, Again, Could China Steal the Solar Throne?) Without a locked-in, long-term supply of the essential material, which is used to transform sunlight into electricity, companies that make ingots, wafers, cells or modules are forced to pay exorbitant spot prices - as much as $200-300 per kilogram.
To get closer to Trina's goal of securing its vital silicon supply, Seburn will be responsible for heading up investments and possible acquisitions in the silicon industry, a company spokesperson said. He will also report directly to chief executive Jifan Gao.
How much investment and in what, exactly, remain open questions. Trina hasn't made any decisions yet, the spokesperson said. Trina's executives could not be reached for comment.
Before going to Trina, Seburn was vice president of operations for REC Silicon, where he oversaw silane- and polysilicon-manufacturing plants. But his job description at Trina will likely go beyond mere silicon procurement, said Travis Bradford, founder and director of the Prometheus Institute for Sustainable Development, a nonprofit research group that also is a Greentech Media partner.
"It's going to include joint ventures and acquisitions and equity investments," he said. "It signals that Trina is following a pattern that's happening throughout the industry of more vertical integration." Originally a solar-system installer, Trina now makes silicon ingots, wafers, solar cells, and panels.
Of course, nearly all wafer, cell, and some module manufacturers assign a high-level staffer to focus on the silicon supply task, Bradford said. "Whether they've given them the title or not is a different story," he said. "Certainly, access to polysilicon is the most important strategic task of cell manufacturers today."
What makes Trina different is its size. Founded 10 years ago, Trina was one of the first Chinese solar-cell companies to go public - after Suntech Power, which kicked off the trend in 2005. Trina paved the way for other China-based firms to raise capital on U.S. stock exchanges, funding later used to ramp up production capacity.
But production capacity is limited by access to reasonably-priced polysilicon. China Sunergy and Canadian Solar both blamed second-quarter losses on the silicon shortage. Other solar and silicon firms like LDK Solar, Hoku Materials, Wacker Chemie and SolarWorld have all announced plans to boost silicon production in recent months to meet demand.
Trina says it has secured 90 percent of its estimated silicon needs for 2007. But it has only 60 percent of what it needs for 2008, according to U.S. Securities and Exchange filings.
That's not unusual. But Trina has reached the point where it needs to remove the obstacles to growth, and profits.
"At a certain point a company has to be a certain size to dedicate a person to a single feedstock," Bradford said. "Trina obviously thinks this is going to be important and they are going to be of a sufficient size to dedicate a person."
We'll see what a difference a job title makes.