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During the steepest first stage of the 1970s super cycle in commodities, the monthly average DJIA first ignored the run-up in continuing to appreciate to a high of 1,067.20 in January 11, 1973, then succumbed to soaring commodity prices by losing 46% from this peak to a low of 573.22 in April 10 1974, after briefly lingering around 800~900 for several months before breaking completely down. The U.S. market may now be in such a phase. 

As commodity prices centering on crude oil continue to surge, governments and companies are making a big push into solar cells as an alternative source of energy. Honda (HMC) has introduced its first fuel cell-powered car (the FCX Clarity) while also offering  a home energy station powered by solar cells that can provide hydrogen fuel for the car, as well as heat and electricity for the home. 
          
Global investments in solar cell production are expected match those flowing into semiconductor making by 2010, or just two years from now. Each photovoltaic factory will require an investment of $500 million and more and will generate annual revenue of $1 billion per year or more, putting them into the size, cost and employment range of semiconductor fabs. The International Energy Agency expects the overall generating capacity of solar cells in use to increase to 22 million kw by 2015 - 5.5 times the 2004 level - and by a further seven times to 145 million kw by 2030. 
          
Rather than going for the “gold diggers”, i.e., solar cell producers such as Sharp and Kyocera in Japan,  we believe a better play would be those who sell the picks and shovels for the industry, i.e., the suppliers of solar cell production equipment and key materials/components for this production. 
           
In Japan, Tokyo Electron (TOELF.PK) is perceived to have noticeably fallen behind its rival Applied Materials (AMAT), but the stocks of three Japanese small-cap solar production equipment companies are seeing a good boost from not only growing interest in the sector, but solid order inflows that are offsetting any weakness in their traditional semiconductor-related businesses. We expect to hear a lot more about such companies.