San Jose’s chip company Cypress Semiconductor, run by the outspoken Mr. T.J. Rodgers, has taken a hit recently, as demand for its chips has fallen, forcing layoffs. The good news is Cypress has put its semiconductor expertise to work in a whole new sector, solar power. Its solar cell subsidiary, SunPower, recently announced it was doubling production capacity, and customers and analysts are saying good things about it. We’ve written about Rodgers’ unsentimental reasons (see link to Mercury News story) for the investments (it’s purely a capitalist endeavor), but it’s a feel-good story nevertheless.

Here’s what American Technology Research analyst Erach Desai said today, reiterating his “BUY” rating on Cypress Semiconductor: “…there are very few pure-play solar companies, but CY offers investors exposure to a fast growth market with enormous potential and the highest quality player in the space.”

Meanwhile, Silicon Valley venture capitalists see increased interest elsewhere in the clean technology space. We couldn’t get to this forum at Berkeley last night, about energy technology and entrepreneurship, but we connected this morning with one of the participants, Bryant Tong, of Nth Power.

He said it was one of the best attended conferences yet, with between 300 to 400 attendees. His panel was over at 8:30pm, but the throng of students/budding entrepreneurs tied him up for an hour afterward — all interested in the clean technology space. As Tong sees it, though, China’s insatiable thirst for energy supplies is driving the demand for new technologies and breakthroughs. Just as important, though, is China’s need to boost efficiency, and so he’s created a group called the China/US Energy Efficiency Alliance to bring the NRDC’s expertise to China — in order to help the Chinese understand how California improved efficiency and to enable them do the same.