This quote came from 8minutenergy CEO Martin Hermann at GTM’s U.S. Solar Market Insight conference:

A panel is a commodity because the buyer can buy more than one brand for an installation, like a semiconductor memory chip. A processor is not a commodity because it requires code conformity; it has a stickiness.

You don’t have that stickiness with panels. I can buy Suntech (NYSE:STP) panels for the project today, and tomorrow I can buy panels from a different company and there is not a lot of technical adjustment. The choice comes to bankability and getting the project financed.

What we are seeing is like the memory market years ago when we had hundreds of players and today we have less than a dozen. The memory market went through boom and bust and in every bust you lost a percentage of suppliers. We will see the same thing in panel suppliers.

It is a good thing for the market because there is not a lot of R&D. If you have a module company with a billion dollars in revenue, it probably has less than 100 people in R&D. If you have a billion-dollar semiconductor company, you probably have 700 or 800 engineers working on R&D.

That explains why there is not much innovation in modules. As consolidation happens and there are fewer module manufacturers in the market, they can afford more R&D and drive innovation.