Echoes of VHS vs. Betamax in solar's wafer wars
Panel-making giants vie to be makers of the industry standard.
(A native of England, Matthew Diebel is a veteran journalist who has worked at NBC News, Time, USA Today and News Corp., among other organizations. Having spent his childhood next to one of the world's fastest bodies of water, he is particularly interested in tidal energy.)
Remember the VHS vs. Betamax videotape war of the late ‘70s and ‘80s? On one side was JVC (JVCZY), whose VHS tapes and machines were cheaper but provided slightly lower quality images. On the other was Sony (SONY), whose Betamax tapes and gadgets provided improved resolution. Sony, which had been first to market, ended up the loser after JVC aggressively sold its design to other manufacturers while its rival insisted on keep its technology to itself.
Now a similar showdown is shaping up in the solar industry, in particular over the ideal size for wafers, the key component for making solar modules. The combatants are the world’s biggest solar manufacturers, industry leader Longi Green Energy Technology (SHA: 601012) Co. and the second-biggest player, Trina Solar (SHA: 688599).
And it comes down to this: Does Longi’s 182-millimeter version trump the 210-millimeter big boy from Trina?
In this case, Longi, like Sony, is the conservative one, having, reports Bloomberg, sought to press pause on a decade-long race to make solar panels larger. The company has gone to the media and industry forums to campaign for its choice, criticizing its rival’s version as too big to produce reliable panels. “We do not see evident value in increasing the size of modules — instead the risk has clearly risen,” Li Shaotang, a senior product manager at Longi, told the outlet. “Unlimited expansion could lead the industry the wrong way.”
Trina, on the other hand, says innovation is vital. “Growing from small to large is the long solar wafer development history,” said Zhang Yingbin, head of Trina’s product strategy and marketing. “It is the No. 1 trend of the industry.”
The super-thin semiconductor wafers are central to solar energy and are wired into solar cells before being assembled into panels. Larger wafer sizes mean larger modules, thus making electricity generation cheaper. Bigger modules, however, have the potential to be less tough in real-world situations.
The stakes are high: Longi’s market cap has soared nearly eight-fold to $63 billion since the end of 2018, while Trina’s almost quadrupled to $20 billion from its trading debut two years ago.
So far, Longi has the advantage because, in addition to being the world's biggest solar panel maker, it is also the top wafer producer and sells them to other companies as well while Trina mostly relies on other suppliers.
Wherefore the wafer war? We’ll be watching.