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Solar cell makers' share prices hit by materials shortage

Shares of the nation's top solar cell makers dropped yesterday after industry watchers issued a caution on the industry's outlook because of a shortage of materials.

Shares of Motech Industries Inc (茂迪), the nation's largest solar-cell maker, closed down 5.3 percent to NT$392.50 (US$11.70) on the over-the-counter GRETAI Securities Market, while smaller rival E-ton Solar Tech Co (益通光能) declined 3.3 percent to NT$497.

"Solar-related companies may see further declines in margins, dragged down by material shortages, despite increased demand for solar energy," JP Morgan analyst Gokul Hariharan said in a report on Friday.

Most solar component makers, excluding material suppliers, saw declining margins in the first quarter, because of the supply scarcity in silicon wafers and more Chinese firms competing in the field, the analyst said.

Motech's profit margins declined to 24.4 percent in the first quarter, down 7.3 percentage points from the earlier three months. It saw sales rise 240 percent from a year earlier to NT$4.5 billion for the first four months.

E-ton's margins also dropped to 16.3 percent in the first quarter from 24.3 percent in the earlier three months. Its revenues, meanwhile, grew 99 percent to NT$1.5 billion in the first four months.

E-ton was fast to dismiss any material shortages by announcing it had sealed a 10-year supply deal yesterday.

Under the pact, the supplier will provide E-ton with 350 megawatts' worth of silicon wafers through the next 10 years, E-ton said in a filing to the Taiwan Stock Exchange, without specifying the partner or the price.

SinoPac Securities Corp (建華證券) recently said they expect to see a slight easing of the supply shortage.

"With the increase in production capacity and an easing of the supply problem, solar-related companies should see stronger sales momentum this month," SinoPac said in a research note last week.

Motech said on May 9 it had won a new sales deal.

It has signed a contract with Open Energy to supply the US renewable energy company with solar cells, paving the way for Motech's expansion into the US market.
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