| Specifications | Liz Leino |
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| Specifications | Liz Leino |
| Business section |
| Specifications | Liz Leino |
| Outline | COST OR VALUE? PHOTOVOLTAIC CELL MANUFACTURERS LOOK BEYOND THE COST OF OWNERSHIP TOTAL COST OF OWNERSHIP A DIFFERENT APPROACH TWO EXAMPLES NOT CAPTURED IN TCO: BREAKAGE AND PRINT QUALITY THE VALUE OF PEGASOTM CALCULATING VALUE CONCLUSION |
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| Content | APPLIED MATERIALS EXTERNAL USE 2 WHITEPAPER COST OR VALUE? PHOTOVOLTAIC CELL MANUFACTURERS LOOK BEYOND THE COST OF OWNERSHIP Solar is the next great energy frontier. Interest in renewable energy sources has never been higher, and manufacturing process technology is advancing at a rapid pace to meet the demands of the photovoltaic market. Sunlight is free, but the technology to convert that sunlight to usable energy can be very expensive. Driving down the cost per watt of solar energy will be key to achieving grid parity in major markets, to expanding solar PV application worldwide — and to profit. In the beginning of the solar-energy era, the cost of manufacturing a solar cell was tied directly to the capital cost of the manufacturing equipment. Price was a key element of a fairly standard process where there was not much differentiation among OEMs and the game was mostly an equipment price battle. Companies did the math to convert equipment cost to productivity, and quickly informed suppliers that the bottom line was more than the market would bear. New technologies are often very expensive — the cost of the first personal computers was as much as a mortgage payment —limiting the number of potential end customers. Just as innovation in chip manufacturing has radically reduced the size and cost of PCs to the point where most people can afford a computer or smartphone, the solar market was ripe for innovation that would reduce costs and lead the way to grid parity. TOTAL COST OF OWNERSHIP A new metric has emerged that is a more comprehensive way than simple Capital Expenditure (CapEx) to compare and evaluate the cost of different solutions. Total Cost of Ownership (TCO), sometimes shortened to Cost of Ownership (COO), was developed by The Gartner Group in the 1980s. It rapidly became a standard methodology providing valuable insight into the direct and indirect costs of a system over a pre- determined period of time. For high-tech companies, this period is generally five years, because that is assumed to be the amount of time that a piece of equipment will remain relevant before new technology is needed. In addition to the capital procurement cost of tools, additional factors should be considered in calculating TCO. There are dozens of these, and a true side-by-side comparison can be very difficult to calculate. Semiconductor companies can seek guidance from SEMI, the global industry association for certain semiconductor manufacturing supply chains. Their document SEMI E35-0307, “Guide to Calculate Cost of Ownership [COO] Metrics for Semiconductor Manufacturing Equipment,” recommends quantifying many factors within three main categories: • Fixed costs (essentially depreciation for property, plant and equipment) • Recurring costs (mostly direct materials, consumables, maintenance and labor) • Yield costs (essentially scrap and mean performance) Companies may take for granted that all of these variables are known, or can be easily and closely estimated. However, this is not always the case. A realistic estimate of these variables requires inputs from process metrology and regular cost updates for direct materials and consumables. These numbers are often tied to spot market fluctuation. |
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