Solar cell makers, including local manufacturers, are facing mounting pressure to turn a profit as steep price declines have driven down gross margin to nearly zero this month, TrendForce Corp (集邦科技) said yesterday.
Solar prices last month began a downward spiral, as demand weakened after the industry entered its slow season this quarter and solar panel installation in China slowed, the Taipei-based researcher said in a report.
China, with installation of 15.13 gigawatts last year, is the world’s biggest solar market.
The declines reversed four straight months of price increases from September last year, which helped Taiwan’s major solar cell makers — Neo Solar Power Corp (新日光) and Gintech Energy Corp (昱晶) — improve gross margin for the fourth quarter last year from 5 percent and 9.7 percent to 8.71 percent and 11.6 percent respectively.
TrendForce said the solar industry has been more volatile this year.
“Solar prices began tumbling after the Lunar New Year holiday [in February], particularly for solar cells. In two months, solar cell prices have fallen 10 percent,” Corrine Lin (林嫣容), a senior TrendForce analyst said by telephone.
“The decline is much more drastic than the pace at which it has occurred during downturns in previous years,” Lin said. “Solar cell companies in China and Taiwan are facing even heavier pressure than their global peers this time, partly due to trade wars [that led to the levy of anti-subsidy and anti-dumping tariffs].”
Lin said she expects solar cell prices to drop to less than the key level of US$0.3 per watt in the short term, adding that the downtrend would extend into the third quarter.
The second quarter is expected to be the weakest period this year for solar companies before a recovery in October, buoyed by improved demand from the US, India, China and Japan, Lin said.
Local solar cell manufacturers have been attempting to minimize the effects of the solar industry’s volatility by allocating capacities overseas in a bid to boost average selling prices (ASP) and to avoid anti-dumping tariffs. They are also expanding into the solar farm industry to boost income.
“Moving capacities overseas would help companies reduce impact from price erosion and help them maintain gross margin,” Lin said. “Those companies might enjoy a 20-percent higher ASP for products made at overseas plants.”
Last month, Gintech said its gross margin would climb further in the first quarter, as products from its Thailand plant delivered a 15-percent higher ASP than the company’s average.
TrendForce yesterday retained its global solar market at 60 gigawatts this year unchanged, almost flat from last year’s 59 gigawatts.
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