Thu, Jul 21, 2016 - Page 12 News List

Solar cell makers to suffer: TrendForce

By Lisa Wang  /  Staff reporter

Most Taiwanese solar cell makers are expected to post losses this quarter on stalling China demand and severe oversupply, market researcher TrendForce Corp (集邦科技) said yesterday.

Demand vaporized last month following the expiration of a Chinese government subsidy program, and new orders might only pick up in October after a new solar policy takes effect, the Taipei-based researcher said.

In the meantime, Taiwanese solar cell makers are losing orders to their Chinese rivals due to higher manufacturing costs, Trendforce said.

To brace for the slump, local makers this month slashed their factory utilization to an average of 70 percent, from about 90 percent last month, TrendForce analyst Corrin Lin (林嫣容) said in a telephone interview.

“The situation will be even dire next month…. Customers are just not ordering at all,” Lin said. “The impact will be sweeping this time.”

Sluggish demand has already seen solar cell prices reach a record low of about US$0.26 per watt this month, but lower equipment utilization will increase manufacturing costs and further squeeze gross margin, Lin said.

The gross margin of local firms fell into negative territory last month, Lin said, adding that companies will become profitable only when gross margin rises to at least 5 percent.

Taiwanese solar cell manufacturers have been trying to strengthen profitability by relocating production facilities out of Taiwan, but the results of their efforts have been limited, she said.

Gintech Energy Corp (昱晶能源) has been more aggressive than its local peers in moving production lines overseas, with about 20 percent of its capacity provided by plants in Thailand this year.

TrendForce expects demand to recover in the fourth quarter after Chinese companies announce new solar installation projects on the back of a new Chinese subsidy program, which is to last for one year.

However, the recovery will not be strong enough to drive a rebound in prices due to massive inventory buildup and rapid capacity expansion in China, Lin said.

This year, Chinese firms are expected to add about 13 gigawatts in capacity, equivalent to the entire capacity of Taiwan’s solar cell makers, Lin said.

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