The semiconductor crunch is easing. What’s next for solar?

Microelectronics power everything from cell phones and computers to the electric grid and artificial intelligence. They’re critical components of the societal fabric and an increasingly hot commodity in the solar ecosystem. 

Silicon and other semiconductors like cadmium telluride are key ingredients in photovoltaic panels, power inverters and transformers. These silent workhorses power every corner of the industry.

Microelectronics are ubiquitous, however, which also leaves the solar market vulnerable to cascading impacts in the event of semiconductor supply chain disruptions, material shortages or cost spikes.  

Although the pandemic-fueled semiconductor shortage is mostly over, the industry isn’t out of the woods yet. Worsening geopolitical tensions have further strained supply chains and created a series of logistical bottlenecks that slow down microelectronics production and shipping. 

For solar companies, these disruptions can delay panel manufacturing and delivery, and lead to longer project build times, and higher costs for manufacturers and developers. Scarcity of critical minerals and rare earth metals also drives up prices, which further impedes the production of semiconductors and products that use them. 

It’s not just the solar industry that relies on semiconductors, but also wind turbines and long-duration batteries, among other climate technologies. 

For instance, according to Lam Research, a typical EV has approximately 2,000 semiconductors, though the New York Times found that one EV could contain up to 3,000 semiconductors. As the demand for EVs rises globally, so does the need for energy-efficient, high-voltage semiconductors and critical minerals. 

Globally, the number of semiconductors that are used by the renewable energy market is expected to grow between 8% and 10% annually through 2027 as electrification efforts kick into high gear. Some analysts expect the solar PV semiconductor market to grow by 20% every year until 2032, when the market is estimated to be valued at over $1,377 billion. 

But semiconductor availability is dwindling. According to SEMI, South Korea, Taiwan and China are leaders in chip production, with the Americas ranking fifth after Japan. This reality has pushed the U.S. to double down on its reshoring efforts in hopes of reducing its dependency on foreign suppliers, bolster domestic production, and protect against supply chain shocks.  

The Chips and Science Act, passed in 2022, the policy allocates over $52 billion for semiconductor research, development and manufacturing in the U.S., aiming to revitalize the domestic microelectronics industry.

Hemlock Semiconductor recently received millions in government funding as part of this reshoring push. The company, which is one of the only U.S.-based manufacturers of hyper-pure polysilicon for the semiconductor and solar industries, earned $325 million for its new Michigan manufacturing facility under the Chips Act’s Funding Opportunity for Commercial Fabrication. 

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