SpareBank 1 Markets Energy Conference February 28, 2019
James A. May II CFO, REC Silicon
REC Silicon
A leading producer of advanced silicon materials, supplying high-performance polysilicon and silicon gases to the solar and electronics industries worldwide
Moses Lake, Washington (USA)
- › Constructed in 1984
- › ~190 employees
- › The first commercial granular polysilicon plant
Butte, Montana (USA)
- › Constructed in 1998 (acquired 75% in 2005 and remaining 25% in 2009)
- › ~210 employees
- › World's largest supplier of silane and other specialty gases
PV and semiconductor Yulin J.V. – China (Associate)
- › Currently in Start-up
- › 15% ownership
- › International operations with presence in China
Products
|
Silane Gases |
Semiconductor grade polysilicon |
|
Solar Grade |
|
|
Czochralski (CZ) |
Float Zone (FZ) |
Polysilicon |
|
|
|
|
|
| Highlights |
›
~70% global market share
›
Distributor Model
›
Lowest cost supplier |
›
Wafers for semiconductor
devices
›
Long-term supply
relationships
›
Market Dominated by 4 Wafer
Producers |
›
High power semiconductor
devices
›
Long-term supply relationships
›
Product qualified by major
wafer companies |
›
Lowest cost polysilicon
›
Unique form factor allows
for crucible recharge
›
Substantial energy saving
vs. competitor
technology |
| Markets |
›
Thin film transistor (TFT)
displays
›
Semiconductors
›
Photovoltaics (PV) |
›
Mobile Devices
›
Consumer electronics
›
Automotive / Aviation |
›
Power management
›
Electric motor controls
›
High voltage applications |
›
Polysilicon is the base
material for PV cells
›
Target multi-crystalline PV
›
FBR-B is mono-crystalline
capable |
| Customers |
›
Industrial and specialty gas
distributors |
›
Semiconductor wafer
manufacturers |
›
Float Zone semiconductor
wafer manufacturers |
›
Solar wafer manufacturers |
Revenues
(2018) |
\$99.3 million |
\$53.6 million |
|
\$69.2 million |
| Location |
Butte |
Butte |
Butte |
Moses
Lake |
BUSINESSES
Butte, Montana Plant
Plant characteristics
- › Commissioned in 1998, acquired by REC in 2005
- › World's largest supplier of silicon gases
- › Manufacturing units with,
- 80 MT liquid silane storage capacity
- Silane loading facility
- Silane ISO Module container fleet
REC is positioned to experience growth
- › Megatrends Mobility, energy efficiency, and power management
- › High quality requirements and long product qualification processes
- › Dominant silane market share and established distribution channel
Strong Growth in Semiconductor Polysilicon Sales
- Long term stable growth market
- REC outpacing market growth short to medium term due to re-entry market
6 © REC Silicon ASA. All rights reserved. Confidential February 28, 2019
Strong Growth in High Margin Silicon Gas Market Segments
- Silicon gases used in flat panel display (FPD), semiconductor and PV applications
- Robust growth in high margin semiconductor and FPD segments
- PV segment Low margin and subject to PV market volatility
REC Shipments Silicon Gases
Moses Lake, Washington Plant
Plant characteristics
- › Original construction in 1984
- › Large scale silane units and FBR reactors constructed beginning in 2006
- › ~18,000 MT FBR-A Capacity
- › Proprietary FBR technology
- Lowest cost of producing solar grade polysilicon
REC is positioned to experience growth
- › Currently operating at 25% capacity due to trade war
- › Ability to quickly increase production with additional market access
- › High growth potential due to PV adoption:
- Climate change drives need for clean energy
- Increasing cost competitiveness of solar energy
Solar Trade War Update – Uncertainty Remains
FBR Low Cost Capability - Despite Low Capacity Utilization
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 USD/kg FBR Production Costs
Polysilicon Price Trend
- › China Reduced Financial Incentives for Solar Installations in June 2018
- › Polysilicon Prices in China Dropped by ~55% During 2018
- › Current Polysilicon Sales Prices are Below Cash Cost of Most Producers
PV Market Estimated to More Than Double By 2035
Source: Bloomberg NEF
12 © REC Silicon ASA. All rights reserved. Confidential February 28, 2019
Polysilicon Economics
- › Assumptions Industry Mythology
- Cost of \$9/kg
- \$35/kg Capital Cost
- › Polysilicon Price at \$10/kg
- Negative Return on Investment
- Will Not Sustain Operations
- › Polysilicon Price at \$15/kg
- Could Support Expansion Given Assumed Plant Characteristics
- › Higher Prices Required to:
- Sustain Current Operations
- Support Industry Expansion
SUMMARY
- › Mitigate the Impacts of the Solar Trade War
- › Maintain Company Liquidity
- › Focus on Cost Control
- › Manage Inventories
- › Potential Shutdown of FBR to Retain Cash
- › Maintain Manufacturing Capabilities
- › Actively Pursue Resolution to the Solar Trade War
Semiconductor
- › Stable Earnings Platform
- › Stable Growth Markets
- › Minimal Impact of Solar Trade War
Solar
- › Significant Potential For Growth
- › REC Positioned to Capitalize on Superior Cost Position
- › Opportunities Contingent on Solar Trade War Resolution
Thank You!