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National Semi: Can it reinvent itself as a solar power?

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National Semiconductor unveiled in-panel solar chipsets that will lead to so-called "smart panels." Can the chipmaker reinvent itself as a solar leader?

Show me a semiconductor company and I'll show you an outfit that sees solar as the next big growth market.

National Semiconductor, best known for its analog chips, said Tuesday that it unveiled the industry's first in-panel SolarMagic chipset. The aim: Create smart panels that can harvest the most energy from the sun. Solar power plant operators are looking for maximum efficiency and National Semi says its system can monitor and power panels at a granular level.

The breakthrough here is that National Semi can now embed its technology into solar junction boxes. Previously, these systems operated as standalone gear. company said that its SolarMagic smart panel chipset is designed to correct design flaws and mismatches that reduce the power of an array.

According to a spec sheet, National Semi is taking its proprietary algorithms and mixed-signal technology to optimize power consumption in a panel. Full details for National Semi's latest solar move can be found in its statement, but the company's playbook looks very familiar. The game: Build out a solar unit and possibly spin it off into a new venture. Cypress Semiconductor executed the solar spin-out move with SunPower.

When it comes to corporate reinvention solar power is a great enabler for chip companies.

Indeed, National Semi has been acquiring solar companies in the last two years. To wit:

  • In March 2009, National Semi bought privately held ActSolar, which made power optimization gear for solar power systems.
  • In October 2009, National Semi bought Energy Recommerce Inc. (ERI), a privately held company that provides web-based monitoring of commercial photovoltaic systems performance.

These products rounded out National Semi's SolarMagic unit, which was largely constructed in the last economic downturn. According to National Semi's annual report, 91 percent of its revenue is related to its core analog chips. Simply put, solar may be a growth business, but it's not carrying the team yet. In addition, SolarMagic's case studies lack many heavy hitter accounts.

In February, National Semi CEO Don Macleod said:

In one of our new and emerging market areas, that is solar energy, where we're focused on become the power management electronics enabler, for even more efficiency in solar panel installations. We continue to ship our SolarMagic reference design product to demonstrate the role that power management semiconductors can play to improve overall solar power efficiency. Of course, our focus here going forward is to have our power management chips integrated into individual solar panels by the panel OEMs and junction box manufacturers. We're on track, working with large volume panel manufacturers for them to bring products to the market in the second half of this calendar year.

National Semi reports earnings on June 10 so changes are good that the company will talk a bit more about solar power. If successful with SolarMagic, the chances are that the solar unit may become better known than its parent. Other chip makers are following a similar path.

  • Applied Materials is a big supplier of photovoltaic manufacturing equipment. It's a natural extension to its chip equipment business.
  • Intel spun off its solar technology into a company called SpectraWatt in 2008.
  • And Micron Technology, a memory maker, formed a venture in January to develop solar technology with Origin Energy Limited, an Australian energy giant.

In fact, you can go through the holdings of many semiconductor companies and find solar ventures. And why not? When it comes to solar panels, the manufacturing issues are about the same as semiconductors. Scale matters. Look no farther than the AU Optronics, SunPower solar cell plant venture for an example. That partnership really revolved around generating the manufacturing efficiencies to better compete with China's solar panel manufacturers. SunPower lists First Solar, Q-Cells AG, Sanyo, Sharp, SolarWorld AG, Suntech Power Holdings, Trina Solar Ltd. and Yingli Green Energy Holding as competitors. Efficiency and scale---the expertise of semiconductor companies---will ultimately win the solar war.

At a recent investment conference, an executive quipped that the solar energy industry is like the semiconductor companies in the 1980s---the technology is promising, but not quite mature yet. Semiconductor firms see the same solar growth ahead and hope the industry turns out to be a fountain of youth for growth.

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Larry Dignan

Editor-in-Chief

Editor-in-Chief Larry Dignan is editor-in-chief of SmartPlanet and ZDNet. He is also editorial director of TechRepublic. Previously, he was an editor at eWeek, Baseline and CNET News. He has written for WallStreetWeek.com, Inter@ctive Week, New York Times and Financial Planning. He holds degrees from the Columbia University Graduate School of Journalism and the University of Delaware. He is based in New York but resides in Pennsylvania. Follow him on Twitter. Disclosure