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Monday, April 26, 2010

A Level Playing Field in SSL?

I had the great opportunity to speak on behalf of SEMI members at last week’s Department of energy (DOE) Solid State Lighting Manufacturing Workshop. The workshop provided information on the first round of DOE-funded manufacturing projects, engaged attendees in technology roadmap priority topics, and provided an update on federal funding opportunities. Last year, the DOE awarded SSL funding to SEMI members Veeco, Applied Materials, KLA-Tencor, and Ultratech for LED manufacturing research funding.

I spoke on the workshop’s final panel to address U.S. manufacturing equipment and infrastructure needs, a public policy discussion. Last year’s $23 million in manufacturing funding was enabled by the stimulus bill; this year the administration has requested a total funding level of only $26.8 million to include basic R&D and manufacturing.

The main objective of my presentation was to recommend a funding level of $20.0 million for SSL Manufacturing Improvements Program to sustain the funding level provided in the 2009 American Recovery and Reinvestment Act (ARRA). The Obama administration has requested a DOE Fiscal Year 2011 budget of $28.4 billion—the idea that less than 2% will go to SSL is a national disgrace. No other goverment activity will probably displace more foreign oil than SSL support over the next decade. Today, 22% of the nation’s electricity is used for lighting. The DOE projects that by 2030, nearly all residential, commercial and outdoor lighting will be replaced by solid state lighting, reducing energy consumption by 50%.

The US funding level is an embarrassment, and reflects the huge gap between political rhetoric (“America can be the 21st century clean energy leader by harnessing the power of alternative and renewable energy…”) and political action. While significant investment is goes to well-connected, 19th century industries like agriculture and banking, the opportunity to meaningfully participate in 21st centuries in being ceded to China and other well-governed, observant countries.

I based my argument for increased manufacturing funding by the DOE on the fact that the US share of capital spending in LEDs is only around 5% and the only way to positively impact manufacturing jobs in LEDs would be to assist US semiconductor equipment and materials manufacturers with a transition to LED manufacturing expertise. I explained that LEDs are based on semiconductor technology and to sustain the current US contribution to global LED manufacturing is to assure the continued strength of equipment and materials companies.

Sustaining, not growing, the US role in the mega-shift to SSL is about the best we can hope for. There are no LED fabs planned for the US. The Department of Labor estimates that semiconductor manufacturing is projected to lose 33.7 percent of the 432,000 jobs it had in 2008, an industry sector decline second only to department stores. Many of these jobs can transfer to LED and solar manufacturing.

China's investment and financing for clean energy rose to $34.6 billion in 2009, out of $162 billion invested globally, according to the report by the nonprofit Pew Charitable Trusts. U.S. spending ranked second, at $18.6 billion, with European nations also recording strong growth. U.S. spending on renewable energy fell 42 percent in 2009 from the year before, constrained by tight credit and the lack of a strong policy framework, the report said. It is likely to rise faster this year, helped by the enactment in 2009 of production tax credits for wind energy and investment tax credits for solar power, but with climate change legislation stalled in the U.S. Congress, the outlook for faster growth remains uncertain.

In terms of clean energy investment relative to the size of its overall economy, China ranks third in the G-20 at 0.39 percent, well behind Spain, which leads at 0.74 percent. The United States, at 0.13 percent, was 11th, the report said.

Don’t assume that just because cleantech manufacturing is moving to China that the US can retain lucrative R&D jobs and spending in the US. ValueNotes, an India-based business intelligence and research provider, stated that "According to the Chinese government statistics, about 750 R&D centers (foreign-funded) exist in China, located primarily around Shanghai, Beijing and Shenzhen." During the last decade, there has been an over 75% growth in employment of research personnel in China to reach close to one million (compared to about 1.3 million total researchers in the U.S.).

During the question and answer session, an audience participant suggested it was an “unlevel playing field.” I replied that the playing field was perfectly level, but unfortunately the US was simply refusing to play.


david5735 said...

Excellent Statistics about SSL. I would love to know more in future. What about global development jointly in the Developing Nations !

Tom Morrow said...

One of the more exciting developments about LEDs in the developing world is their use as off grid lighting sources to replace kerosene in villages. Companies and governments set up a solar panel in a village that recharges small portable LED lighting systems during the day, allowing families to read and spend time together at night