Shares of CMC have increased 40 percent to NT$16 since early this year, while Unitech closed at NT$31.80 on the Taiwan Stock Exchange last Friday, a rise of 76 percent since the start of this year.
"Stocks of solar wafer makers and cell makers are investors' favorites when the oil price spikes, and this has also helped boost the shares of solar cell start-ups," said Kevin Chung (鐘國忠), a deputy manager at Jih Sun Securities Investment Consulting Co (日盛投顧).
A recent decline in the oil price from its peak in June and intensifying competition due to growing entrants in the industry, however, would limit the upside of solar shares, he said.
"I wouldn't advise investors to buy or hold solar cell shares at the moment, especially solar cell makers such as Motech Industries Inc (茂迪) and E-Ton Solar Tech Co (益通光能), which have thinner margins than solar wafer makers," Chung said.
Motech shares closed at NT$312 last Friday, a decline of more than 23 percent since the beginning of this year. E-Ton shares have also fallen more than 30 percent to NT$387.
Topology's Hsu said that it was easy for companies to make inroads into the market, but it would be more challenging to sustain their growth due to constant supply constraints of raw materials, silicon wafers and high technological barriers when attempting to increase their solar cells' power conversion efficiency rate.
"It is very difficult to lift the conversion efficiency rate by a mere 1 percent," Hsu said.
Shenkeng (
To secure sufficient supplies of silicon wafers, Motech has signed long-term supply agreements with global suppliers, such as Swiss Wafer AG.
Hsu said the high price of silicon wafers would cast a shadow over the profitability of the nation's solar cell manufacturers in the foreseeable future.
RSS