Top-10 solar cell suppliers in 2009: First Solar to produce twice as much as leading crystalline solar module suppliers

EL SEGUNDO, USA: Leveraging its low-cost thin-film process, US-based First Solar Inc. is set to surpass its crystalline competitors to become the world’s largest producer of photovoltaic (PV) cells in 2009, according to iSuppli Corp.

First Solar in 2009 is set to produce 1,100 Megawatts (MW) worth of solar cells, more than double the 503MW it made in 2008. This will give First Solar nearly twice as much production of total solar cells as its nearest competitor, Suntech Power Holdings Co. Ltd. As iSuppli noted in an Aug. 10 release, SunTech in 2009 is set to become the leader of the crystalline segment, which is a subset of the total solar cell market.

“First Solar is leveraging its cost leadership to achieve market-share leadership in the global PV solar cell business,” said Dr. Henning Wicht, senior director and principal analyst for iSuppli. “The company’s proprietary thin-film process is giving it an edge over the competition amid challenging solar market conditions.”

The figure presents iSuppli’s forecasted worldwide market share for all types of solar cells in 2009.

iSuppli:Forecast of Top-10 Suppliers of Solar Cells in 2009 (Ranking by Production in Megawatts (MW))Source: iSuppli, Sept. 2009

“First Solar sells its products at very competitive prices, always undercutting crystalline cells,” Wicht said. “With its capability to produce cells at a cost of 89 cents per watt in the second quarter, First Solar is generating stable operating margins, while its competitors are struggling to stay profitable. Despite global oversupply of PV modules, First Solar is continuing to expand and is able to sell nearly all of its finished goods.”

Beyond low-cost production, First Solar’s success is also being driven by its well-established sales channels in Europe and its own installations for U.S. utility projects.

First Solar will be the only company among the Top-4 solar cell suppliers able to gain market share in 2009, iSuppli predicts. The company’s portion of global solar cell MW production will rise to 12.8 percent in 2009, up from 7.5 percent in 2008. No.-2 SunTech, No.-3 Sharp and No.-4 Q-Cells -- all will suffer contractions in total solar cell market share.

First Solar also holds the lowest levels of inventory in the global solar cell industry. Because of this, iSuppli expects the company to actually sell all of its production in 2009, rather than stockpiling it. With inventories throughout the PV supply chain soaring, this give First Solar a significant competitive advantage.

With 3.92GW worth of solar capacity set to be installed in 2009, First Solar’s cells will account for as much as 28 percent of the total, according to iSuppli. The company’s share will be even higher in ground installations and large rooftops, where its products find the strongest acceptance. Its share will be lower in other types of installations, such as small rooftops.

Thin-film represents a new generation of solar cell technology that is gaining acceptance worldwide. Traditional solar cells have employed crystalline material, which is relatively efficient at converting light into electricity, but also more expensive relative to thin-film. In addition to SunTech, crystalline solar-cell suppliers include Q-Cells, Sharp, Yingli and JA Solar.

In contrast, thin-film employs slim layers of materials including cadmium, tellurium, copper, amorphous, and microcrystalline silicon.

Because of its cost advantage, thin film will grow to account for 34.5 percent of worldwide solar production in terms of MW in 2013, up from 14.2 percent in 2008.

Despite the strong rise of thin-films, iSuppli doesn’t believe that the technology will surpass crystalline in the foreseeable future.

“The rise of thin-film is due to the success of First Solar and its unique thin film process,” Wicht said. “There’s no new First Solar yet on the horizon. With only one supplier, thin film’s progress will be limited.”

First Solar employs a patented process using cadmium telluride (CdTe).

Previously committed capacity expansions cause solar cell manufacturing oversupply!

AUSTIN, USA: According to DisplaySearch's Q3’09 Quarterly PV Cell Capacity Database & Trends Report, solar cell manufacturing capacity is likely to grow 56 percent in 2009 to 17GW. Ramped capacity, which was only 2.3GW in 2005, is forecast to grow at a CAGR of 49 percent to more than 42GW in 2013.

"Despite PV module demand shrinking 17 percent in 2009, so much cell manufacturing equipment was ordered and installed over the past year that capacity is still expected to grow 56 percent this year," said Charles Annis, DisplaySearch Vice President of Manufacturing Research and author of the report.

"With demand and capacity moving in different directions, the PV industry is currently experiencing an enormous over-supply that is causing rapid price erosion and potentially setting the stage for the failure of multiple cell manufacturers, particularly companies pursuing a-Si thin film solar cells.

"The PV industry will begin working through this excess capacity as demand recovers next year and takes off in 2011 and beyond.”

Here are just some of the many highlights from the Q3’09 Quarterly PV Cell Capacity Database & Trends Report:

* Through 2006, Japan had the largest solar cell production capacity in the world. However, Chinese companies started to ramp up a host of new facilities in 2005 and by 2007 had more solar cell capacity on line than any other country.

China has continued to invest heavily in production facilities, about a third of the worldwide cell capacity in 2009 and is forecast to be the main region for cell production well into the future.

* Of the 3.58GW of thin film capacity available in 2009, more than 30 percent use 600×1200 mm glass substrates, the standard CdTe glass size used by First Solar.

Gen 5-equivalent substrates, ranging from 1000×1200 to 1100×1400 mm, are the second most common glass size, used for 18 percent of available thin film capacity.

* Between January 2008 and July 2009, approximately 11.4GW of new solar cell capacity was installed in fabs around the world. These previous investment commitments are the reason that capacity is continuing to grow 56 percent in 2009 despite falling demand.

* In 2005, 95 percent of solar cell manufacturing capacity was for crystalline silicon solar cells and 5 percent for thin-film solar cells. In 2009, thin film will account for more than 20 percent of capacity.

By 2013, thin film technologies are forecast to account for as much as 30 percent of solar cell capacity.

* For a-Si factories, in 2009 the four largest turn-key equipment vendors are AMAT, Oerlikon ULVAC and EPV, representing 946MW of ramped capacity or more than 50 percent of a-Si capacity online this year.

* In terms of capacity available for production in 2009, First Solar is the largest solar cell manufacturer with more than 1GW of capacity. Q-Cells and Suntech are not far behind and essentially tied for second place. These and other current leading PV cell manufacturers are forecast to invest at the highest rates over the next four years.

By 2013, these three companies plus JA Solar, Motech, REC, SunPower, Yingli, Showa Shell Solar (assuming it moves forward with a planned 1GW CIGS fab), and Sharp are forecast to be the top 10 makers, with more than 16GW or 38 percent of 2013 capacity.

Half of all solar panels made this year won’t be installed in 2009!

EL SEGUNDO, USA: How bad is the solar panel glut?

* So bad that nearly half of all panels made this year won’t be sold in 2009.
* So bad that the present massive oversupply of panels will persist until 2012.
* So bad that iSuppli Corp. is now reducing its forecast for solar panel production out to the year 2013.

“The solar industry in 2009 has been undermined by collapse in demand due to the decision by Spain—which accounted for 50 percent of worldwide installations in 2008—to change its feed-in-tariff policies,” said Henning Wicht, senior director and principal analyst for photovoltaics at iSuppli.

“This demand drop led to a massive buildup of inventory throughout the supply chain, from the raw material polysilicon, to PV cells, to complete solar systems. Despite this, solar panel makers have continued to increase capacity and production, exacerbating the inventory buildup.”

Total solar panel production in 2009 will grow by 14.3 percent to 7.5 Gigawatts (GW), up from 6.5GW in 2008. However, only 3.9 GW worth of installations will take place this year. That means that almost one out of every two panels produced in 2009 will not be installed but stored in inventory.

“This inventory glut will have a long-term impact on the solar business, with panels set to remain in a state of oversupply until 2012,” Wicht said. “After that year, fast-growing demand for solar installations will be able to absorb global panel production and inventory.

iSuppli’s updated forecast now shows supplier production flattening for the years from 2011 through 2013 compared to the old forecast.”

The figure presents iSuppli’s previous and updated forecasts for solar panel production in terms of GW.

iSuppli: Previous and Current Global Solar Panel Production Forecasts in Gigawatts (Crystalline and Thin Film)Source: iSuppli Aug. 2009

Still ramping?
Despite the global economic recession, most of the leading producers of solar panels -— such as Suntech, Sharp and JA Solar -— will continue to grow in concert with the overall PV industry, although they have no intention of slowing production of cells and panels.

“Even in the face of the downturn, many panel and cell producers have continued to ramp up their capacities as if a recession had never occurred,” Wicht said. “Most companies are doing this in order to maintain their share in the market.”

As a result, Suntech will push Q-Cells aside and become the No.-1 producer of crystalline cells in 2009, iSuppli predicts. Sharp, Yingli and JA Solar also will defend their Top-5 positions this year by not reducing their solar-cell production increases.

Those suppliers that have reduced or made adjustments to their production of cells and panels as a result of the softening demand have seen their short- and mid-term strategies falter. These suppliers include Q-Cells, SunPower and BP Solar.

Q-Cells, in particular, slowed down cell and panel expansion at its plant in Malaysia and has significantly reduced production targets in 2009. Likewise, SunPower has cut back its plans for expansion, while BP Solar has closed its panel production operations in Malaysia and Spain.

So, while some companies are hiking up production in order to maintain their positions in the market, others are forced to undertake short-term production cuts and delay or even cancel long-term expansion projects.

Solar market suffers inventory glut

EL SEGUNDO, USA: A massive oversupply of solar modules combined with disappointing demand caused average inventories throughout the solar supply chain to soar by 64.3 percent, spurring major oversupply and price erosion, according to iSuppli Corp.

Average days of inventory among solar module and cell makers, polysilicon and wafer suppliers and vertically integrated companies that provide all these items surged to more than 121 in the first quarter of 2009, up from 74.2 during the same period in 2008.

“The worldwide solar industry for the first quarter added the equivalent of one-and-a-half months of excess inventory in just one year,” said Dr. Henning Wicht, principal analyst, Photovoltaics (PV) research, for iSuppli. “With new polysilicon capacity coming online this year, the PV industry will suffer further price erosion, at all nodes of the value chain.”

iSuppli estimates the spot price per kilogram for polysilicon, the key raw material for making solar cells, will drop to $50 by the end of the year, down by 72 percent from $180 per kilogram at the beginning of 2009.

The figure presents average days of inventory for the major segments of the solar supply chain.Source: iSuppli, July 2009

The perils of poly
On the demand side, the solar market is coping with a demand sinkhole that was left after Spain’s PV demand collapsed. Despite this, solar-cell makers are still compelled to take deliveries from their polysilicon suppliers due to their long-term contractual obligations.

On the supply side, polysilicon providers recently invested billions in new facilities, forcing them to produce in order to cover these new fixed costs.

Integrated firms holding the bag
Some of the hardest-hit entities in the PV industry have been the fully integrated players. These companies, including REC, Yingli, and SolarWorld, have operations in all three nodes of the value chain: polysilicon, wafer and cells.

Inventory levels for this segment jumped to more than 161 days in the first quarter, up from 86 days during the first three months of 2008.

One major reason these companies have borne the brunt of the inventory surge is their integrated structure. These firms possess integrated wafer and polysilicon production that help secure raw materials during periods of a supply bottleneck in the industry.

However, the integrated firms found their hands tied to their own capacity at various nodes when demand dropped off a cliff at the end of 2008.

This, in turn, created a lag time relative to other sectors in the industry that is now just reacting to the business environment, causing the severe inventory build-ups that led to margin compression.

Cell and module manufacturers
Cell and module manufacturers are currently experiencing significant increases in inventory, with levels rising to 105 days from the third-quarter level in 2008 of 47 days. This is due, in part, to pressure from wafer and polysilicon suppliers desiring that their customers adhere to shipment schedules negotiated in 2007 and 2008.

Polysilicon and wafer manufacturing have done the best job of maintaining inventories in this dynamic environment. With only a modest increase to 98 days from 74 days a year ago, it would seem that things are not looking so bad at this node compared to that of cell and module manufacturers.

However, as the year rolls on, this node in the chain will be hit with additional capacity coming online from major existing and relatively new polysilicon players. Such a development will lead to severe turmoil at this section of the value chain as the spot market will be flooded with excess capacity, with many looking to only cover variable costs.

iSuppli expects to see inventories at this node in the value chain to rise throughout this year and persist into 2010.