Photovoltaics reset button: $15.2B in equipment spending is on the line

The c-Si solar cell equipment market aims for 31% year-over-year expansion in 2011; thin-film photovoltaics manufacturing equipment predicts 71%. But the current PV spending cycle will peak in Q2 2011, followed by a sharp decline as the industry resets its expansion plans to meet the pending market downturn, says Solarbuzz.

April 19, 2011 — Following a year when global photovoltaic (PV) market demand grew 139%, PV cell manufacturers have embarked on aggressive expansion plans in support of ambitious shipment guidance for 2011. Consequently, the scale of expansions announced would create a $15.2 billion revenue opportunity for PV equipment suppliers during 2011, an increase of 41% Y/Y, according to the latest Solarbuzz PV Equipment Quarterly report.

While Y/Y growth for c-Si equipment spending (including ingot, wafer, cell and module stages) in 2011 would amount to 31%, thin-film spending would grow by an incredible 71%. Underpinning this thin-film growth is a resurgence of investments in a-Si and CIGS technologies, which account for 78% of planned thin-film capacity expansions.

Tier 1 expansions remain dominated by aggressive schedules announced by publicly listed Chinese c-Si producers, followed by cell producers in Taiwan and thin-film leader First Solar (FSLR). Examples of revised year-end nameplate capacity targets include JA Solar to 3GW, Trina Solar to 1.9GW, Neo Solar Power to 1.8GW, and Jinko Solar to 1.5GW. In the past 12 months, manufacturers in China and Taiwan accounted for 82% of the $3.6 billion revenues allocated to new c-Si cell equipment worldwide.

Thin-film manufacturing capacity is scheduled to grow by 70% between Q1 2011 and Q1 2012, as the second thin-film investment cycle draws to a conclusion. Within this period, 65 thin-film expansion phases are projected to be implemented, with a combined nameplate capacity of 4.8GW.

According to Finlay Colville, senior analyst at Solarbuzz, “Fab investments during 2011 are providing opportunities for the PV equipment supply-chain, reflected in tool backlogs at the $1 billion level reported during Q1 2011 by equipment leaders Applied Materials, Centrotherm, GT Solar and Meyer Burger. While suppliers of choice to tier-1 manufacturers have been forced to increase monthly tool shipments, tier-2 c-Si and thin-film investments are offering significant revenue upside for emerging equipment suppliers.”

Capacity expansions are consistent with leading cell manufacturers guiding 2011 shipment growth rates of 55%. However, market demand is forecast to increase by only 12% this year, as incentive tariff cuts are implemented across major European markets. This imbalance will have a profound impact on the equipment supply-chain, starting with a reset of capacity growth plans during 2H’11. With tool lead times typically 3-6 months, the full impact of these changes will be felt hardest during 2012.

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Figure. PV equipment spending by technology segment (Q1 2011-Q1 2012) Source: Solarbuzz PV Equipment Quarterly.

During Q1 2011, PV equipment spending reached another quarterly high of $3.7 billion. The current PV spending cycle will peak in Q2 2011, followed by a sharp decline from Q4 2011, as the industry resets its expansion plans to meet the pending market downturn in 2H 2011. For leading equipment suppliers aligned with tier-1 expansion phases, this will translate to an immediate decline in new order intake.

However, new opportunities will then emerge for equipment suppliers of next-generation fab tools, as high-efficiency roadmaps are reprioritized. Q-Cells recently announced plans to upgrade their 1.1GW of cell capacity during 2H 2011 with front- and rear-side enhancements, providing an early indicator of roadmap deliverables. High-efficiency c-Si variants are forecast to comprise 35% of all c-Si cell capacity by Q1 2012. Accelerating next-generation concepts will facilitate adoption rates of new tool types, such as ion implanters being championed by semiconductor-equipment maker Varian Semiconductor Equipment Associates (VSEA).

As existing backlogs are shipped during 1H 2011, strong Q1 2011 revenues will be announced shortly. However, the leading indicator will be new orders received, as PV producers review their plans for 2012. Further expansion by thin-film entrants will depend on the success of initial fabs ramped up in 2011 and 2012. However, a long queue of hungry investors eyeing up the PV industry will likely keep this fragmented segment financed for some time.

As the equipment spending cycle approaches its downturn in 2H 2011, new challenges will emerge for tool suppliers. This is most vividly captured within the US$750 million segment for plasma-enhanced chemical vapor deposition (PECVD) tools used to deposit passivation layers and anti-reflecting coatings during c-Si cell formation. Meyer Burger’s proposed takeover of Roth and Rau comes ahead of a likely drop-off in PECVD order intake as Centrotherm increases its market share, Jusung Engineering is buoyed up following a significant win at a top-10 cell producer, and Orbotech’s subsidiary OLT Solar prepares to deliver its first beta-site tool in Q2 2011.

The Solarbuzz PV Equipment Quarterly report provides the tools to enable PV equipment suppliers to navigate around these challenges by identifying target customers or competitors, equipment revenues on offer down to the key process tool level, and the precise timing of each PV manufacturer’s announced fab expansion plans by quarter out to 2015.

The Solarbuzz PV Equipment Quarterly features a comprehensive capacity and production database incorporating Solarbuzz’s proprietary industry knowledge across over 350 c-Si cell and thin-film panel producers, and a PowerPoint report with extensive analysis on technology and equipment spending trends. All data and analysis is updated on a quarterly basis and includes expansion and spending activity from the immediate quarter closed for over 1100 capacity expansion phases out to 2015. The performance of leading PV equipment suppliers is analyzed, including PV-specific process tool revenues, bookings, and backlogs—each updated on a quarterly basis.

Solarbuzz, part of The NPD Group, is a globally recognized market research business focused on solar energy and photovoltaic industries. For more information, visit www.solarbuzz.com.

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