Sales of PV manufacturing equipment will be more than chopped in half in 2012 due to realization that far less "new" capacity is needed, plus tighter demand for upgrading or replacing existing capacity

November 10, 2011 - Sales of PV manufacturing equipment will be more than chopped in half in 2012 due to realization that far less "new" capacity is needed, plus tighter demand for upgrading or replacing existing capacity, says IMS Research.

It's a well-explored theme: PV manufacturers have invested heavily in capacity (and thus new manufacturing equipment), initially to build up market share and credibility as a volume supplier. Included in that surge was a lot of Tier 2-3 players who also are trying to prevent being washed out of the market, as everyone else does the same thing. So it's been a great ride up for PV equipment suppliers. Unfortunately that capacity surge has far exceeded any demand levels -- Tier 1 suppliers are now projected to meet the entirety of demand all on their own.

IMS Research now projects just $5.7B in PV equipment sales in 2012, a -55% decline from 2010's record $12.8B level. (That's even more severe than the -45% dropoff projected three weeks ago by Solarbuzz's Finlay Colville.) That massive overcapacity and slower-than-expected (and even reduced) demand is spawning postponements and cancellations for PV manufacturing equipment.

IMS senior research analyst Tim Dawson, though, points out that this is likely a short-term correction, and a longer-term return to growth "is inevitable" for 2013 -- but not any hallmark "V-shape" one-year snapback. (More like, a lowercase-v.) "The PV manufacturing equipment market will instead steadily recover; as companies look to invest once again in new equipment to remain competitive, improve their production processes, increase cell efficiencies, and reduce the cost per watt associated with the ultimate end product," he writes.



Global PV manufacturing equipment revenues, Y/Y % change. (Source: IMS Research)