Solar struggles: Calisolar lays off 80

Solar silicon maker Calisolar is laying off about 80 employees in its Silicon Valley factory as part of its shift in business focus, the company said on Wednesday. The layoff represents about 23 percent of the company’s labor force globally.

The Sunnyvale, Calif., company said in a statement that it is shrinking its solar cell production in order to focus on being a silicon manufacturer. Calisolar was founded in 2006 to commercialize a technology to make cells from purified silicon. Around that time, the prices for conventional, pure silicon were going up to a few hundred dollars per kilogram, because silicon producers couldn’t make enough to meet the demand from both the solar and chip manufacturers. Silicon is the key ingredient in processors that power consumer electronics such as laptops, cell phones and iPads.

Purified silicon uses cheaper but dirtier metallurgical-grade silicon material, and using it to make cells requires a different process. The company says that purified silicon costs less and works just as well as conventional silicon, but there is skepticism about whether it can deliver the same quality. Calisolar built a small solar cell factory to demonstrate the quality of its purified silicon cells.

The company opened its first solar cell factory in Silicon Valley in 2009 and began shipping products to customers in 2010. Calisolar’s website says more than 60 MW of solar panels that contain its cells have been installed.

Calisolar bought a silicon purifying company, 6N Silicon, in Canada in 2010, and the company is continuing to operate a silicon plant there. The company also has an R&D center in Germany.

For a while, it looked like Calisolar was on a path to expand its business in both silicon and cell manufacturing. Back in mid-2009, the company’s then CEO, Roy Johnson, told me that the company was building a 50 MW cell factory in Sunnyvale and wanted to expand that to 200 MW by the end of 2010. The company currently has a 75 MW cell factory, a Calisolar spokesman said.

Prices for conventional silicon were falling quickly in 2009 because more producers had opened factories. Johnson said the company could still produce its purified silicon cells at a lower cost.

But the company indicated as recently as two weeks ago that cell manufacturing was no longer its focus. As we pointed out, the company talked about building a silicon factory in Mississippi and intended to sell the material to cell manufactures rather than using it to produce cells at Calisolar’s own factory.

Mississippi approved a $75.25 million package to help Calisolar build the $600 million factory, which will be able to produce 16,000 tons of silicon per year. The project promises to create 951 full-time jobs with an average annual salary of $45,000, as well as benefits, according to a press release from Mississippi Gov. Haley Barbour, after the state legislature approved the incentive package. There will be around 1,000 construction jobs when factory building reaches its peak.

The company’s current plan doesn’t involve shuttering the cell production plant. It says it’s “reviewing several options for the facility.” One potential use could be turning it into an R&D space.