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Into Thin Air: The Disappearance of Dozens of Chinese Solar Companies

The bankruptcies of roughly two dozen U.S. and European photovoltaic manufacturers have framed much of the story about an oversupply of solar panels and crashing prices over the past year. What's less known is the impact on the PV manufacturing industry in China, where over 50 companies also have closed, said John Lefebvre, president of Suntech Power's American operations, during Intersolar in San Francisco on Wednesday.

The consolidation trend is working its way through the ranks of lesser-known Chinese solar manufacturers while the top companies in China are gaining greater market shares, Lefebvre said. The shakeout within China’s solar industry isn’t surprising, though many Chinese companies, unless they are publicly traded, don’t announce their closures or other big changes to their operations. In comparison, about a dozen U.S. manufacturers and "several" European companies have met the same fate, Lefebvre said. 

No one can predict how many solar manufacturers anywhere in the world will disappear into thin air as a result of this ongoing oversupply problem. The glut will likely persist for the next few years, according to GTM Research, which is expecting 59 GW of solar panels being produced to meet 30 GW of demand for 2012.

Taiwan alone has the capacity to produce 10 GW of solar cells, Lefebvre pointed out. Taiwanese cell makers have seen an uptick in business as a result of a pending trade complaint that would impose duties on solar cells made in China and exported to the U.S. To skirt the duties, many Chinese companies have said they would buy solar cells in Taiwan and assemble those cells in their factories in China or elsewhere.

Just today, Germany-based Centrotherm, which sells factory equipment for making solar cells and panels, filed for bankruptcy.  Last week, Abound Solar, a cadmium-telluride solar panel maker in Colorado, filed for bankruptcy. Also last week, General Electric said it was suspending an effort to build a 400 MW factory to make cadmium-telluride solar panels because solar panel prices have tumbled more than 50 percent since early 2011.

While many companies are closing factories, still many more are building new production lines. Some of them are startups that need to reach certain manufacturing scale to compete, and they include copper-indium-gallium-selenide (CIGS) thin film makers Stion and SoloPower. Some major players also are expanding production because they believe the oversupply is a short-term malady. Canadian Solar is looking at building a 700 MW factory to roll out a new technology that will push its efficiency to around 19 percent, said Shawn Qu, Canadian’s CEO, during a panel discussion at Intersolar on Tuesday.

“There is a good chance that we will make this move. It’s tough for me as a CEO to make that decision at this time in the industry,” Qu said. He added that his company won’t likely sell solar panels with those advanced cells in the U.S. market because of the trade complaint against Chinese silicon solar manufacturers.

The U.S. Commerce Department is investigating the trade complaint, which was filed by a coalition led by SolarWorld, and has issued preliminary decisions to impose duties. The department plans to issue a final decision in October this year.

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