Contract electronics maker Inventec Corp (英業達) expects its solar power business to become unprofitable this quarter, due to worse-than-expected demand and sharp declines in solar prices, a company executive said yesterday.
“Demand from China and Southeast Asia is much weaker than our previous estimate,” an Inventec’s investor relations official said by telephone.
The Chinese government and many Southeast Asian governments had been cutting demand and reducing subsidies for solar power products, the official said.
The declining demand dragged down the average selling price of solar power products, weighing on profitability of solar power manufacturers, she said.
Inventec has been selective about taking orders from clients amid falling average selling prices in the past few months, in an effort to maintain a certain level of margin for the business, the official said.
The official said the weakness might extend to the next quarter, as there are no signs of demand improvement in the market for the time being.
“We previously forecast that the solar-power segment could turn profitable this year, but now we hope the business could break even by the end of this year,” she said.
Inventec suspended planned investments to expand its solar-cell capacity for the second half of this year amid industry headwinds, she said.
Company chairman Richard Lee (李詩欽) in June told reporters that the company planned to invest NT$2 billion (US$63.06 million) in the second half of this year, expanding the annual capacity of Inventec’s solar-cell plants to 1.6 gigawatts before the end of this year.
Lee said the company would invest another NT$600 million to NT$700 million in its solar-cell plants before the second quarter next year.
The official said that the company would carefully evaluate industry dynamics before continuing its annual capacity expansion plans.
Inventec’s solar cell business contributed about 3 percent of its total revenue of NT$108.33 billion last quarter, according to company data.
The solar-power segment was profitable in the first half of this year and the combined revenue of the segment totaled NT$12 billion during the period, the official said.
The official said that revenue in the first six months almost reached the annual revenue of NT$13 billion last year.
Gross margin for solar-power business was 10 percent in the first quarter and dropped to between 5 and 6 percent last quarter, the official said.
She said the solar-power business is the only dark spot in Inventec’s operations this year, while the company’s other segments, such as notebook computers, servers and handheld businesses, are strong and steady.
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