Watch for fallout in equipment companies as solar crisis hits in 2010

NEW TRIPOLI, USA: Solar equipment companies will feel the impact of a looming solar industry crisis in 2010 according to the report: Opportunities in The Solar Market For Crystalline and Thin Film Solar Cells, published by The Information Network.

“In our release on September 3, we forecast that in 2010 the solar industry will exhibit capacity utilization of 25.7 percent, inventory will be stretched to 133 days, average selling prices could drop below $1 per watt in 2010 and $0.50 in 2011, and as many as 50 percent of the more than 200 solar manufacturers, mired in red ink with current selling prices above $2.00 per watt, may not survive,” noted Dr. Robert Castellano, President of The Information Network.

In addition to the failure and consolidation of the solar panel manufacturers, companies supplying equipment to manufacture panels will be severely impacted. Two things will happen. The obvious impact will be the loss of customers of equipment suppliers.

Solar manufacturers, in their exuberance to increase capacity from 17.6GW in 2009 to 24.2GW will initially purchase equipment only to have it sit idle in factories as inventory stretch to 133 days. As these companies close or consolidate, this equipment will then be sold on the secondary market, further exasperating revenue growth for equipment vendors.

Currently, the equipment companies are experiencing a slowdown because even though solar customers want to buy, financing is still tight. Going forward, the largest solar manufacturers will survive as a customer base. Chinese solar manufacturers, who prefer to purchase low-cost equipment from Taiwan, will also survive, as the Chinese government will subsidize their survival by stimulus packages, generous subsidies, free land, and cash for R&D.

Solar panel manufacturers that have reported losses just in the past few weeks include Energy Conversion Devices Inc, JA Solar, LDK Solar Co., ReneSola Ltd, Solar Power Inc., and Yingli Green Energy Holding Co. Ltd.

“Interestingly, five of the six companies are Chinese. They continue to increase inventory, lose money, and affect the entire solar panel industry. Perhaps, it is an attempt to become the worldwide leader in the solar market by eliminating the competition,” added Dr. Castellano.

In 2008, the top 10 equipment manufacturers of the $4 billion market were:

Table: Ranking of Top 10 Equipment ManufacturersSource: The Information Network, USA

Applied Materials and GT Solar are the only two U.S. manufacturers in the top 10.