Two themes are front and center as the solar PV industry begins 2012: overcapacity and uncertain demand mean PV equipment suppliers need to shift their focus to customers’ technology roadmaps, and the Asia region’s emergence as a major end-market is giving a boost to some regional equipment suppliers.
January 17, 2012 – Two themes are front and center as the solar PV industry begins 2012: overcapacity and uncertain demand mean PV equipment suppliers need to shift their focus to customers’ technology roadmaps, and the Asia region’s emergence as a major end-market is giving a boost to some regional equipment suppliers.
Suppliers of solar PV equipment began 2011 anticipating another boom year, fulfilling demand for capacity expansions across their customer landscape. But expansions dried up fast once everyone realized how far capacity was outpacing actual demand, and the outlooks for 2012 aren’t much better. Bottom line: the industry overbuilt to a 50GW capacity level, but effective capacity is closer to 30GW, and that leaves a great deal of production either running at very low utilization, idled, or shut down entirely, notes NPD Solarbuzz senior analyst Finlay Colville. Solar PV companies are refocusing on profitability until they see signs that end-market demand will push past that 30GW before they spend on equipment again.
For technology equipment suppliers, stifling capacity overexpansion (and anemic 50-percent factory utilization rates) means they need to shift their strategies to the other main driver of business: technology upgrades. “PV equipment suppliers are eagerly searching for technology-buys that will both soften the revenue declines during 2012 and give a clear indication of the process tool types to be prioritized from 2013,” explains Colville. The c-Si equipment roadmap, for example, indicates a significant pullback in “standard” c-Si capacity (defined as legacy p-type substrates and conventional process flows), but an increase in high-efficiency cells, an area that (unlike the rest of c-Si solar PV) is projected to add 75 percent capacity during 2012. (“Standard extra” is defined as producing panels with minor incremental change and 0.2-0.5 percent improved conversion efficiency; “high efficiency” is defined as more advanced and alternate process flows that add at least 1 percent efficiency.) With PV equipment suppliers’ 2012 revenue outlooks still cloudy at best, “success will be provided to those suppliers that can align product portfolios with equipment process chains that are economic in the new low cost PV manufacturing environment,” Colville says.
Figure 1: Technology roadmap trends for new c-Si cell capacity added. Standard (Source: NPD Solarbuzz)
Many solar PV suppliers actually did manage to stay ahead of the pack in 2011 thanks to established upstream footing, and increasingly with a presence in Asia. Applied Materials will remain the biggest individual PV equipment supplier, growing sales more than 60 percent due to the extensive reach, by geography and tier category, of its process tools for wafer and backend cell production. Many European firms are keeping pace too, with record revenues anticipated by Centrotherm, Meyer Burger, Schmid, RENA, Amtech-Tempress and DEK-Solar.
A key to many firms’ growth is expansion in Asia’s end-market, which is particularly benefiting regional suppliers from Japanese wire-saw producer Komatsu-NTC to turnkey a-Si suppliers Oerlikon and Chinese firm Fujian Apollo. The emergence of Chinese suppliers (Apollo, CETC-48, Zhejiang Jinggong, and Jingyuntong have enjoyed a collective 200 percent CAGR from 2008-2011) has come at the expense of some traditional European suppliers, most notably Roth & Rau, Manz, ALD-Vacuum, and PVA-TePla, whose collective 2011 market share is seen at less than half what it was in 2008, notes Solarbuzz.
Figure 2: Leading PV equipment suppliers (c-Si poly-to-module and thin-film) by recognized revenues, including estimates out to March 31 2012. Market share determined using three-quarter rolling averages across any given trailing twelve-month period.(Source: NPD Solarbuzz)
The reality for 2012 (and maybe longer), though, is that the “euphoria” behind the 2010 surge is gone, replaced by the heavy realization that industry capacity has a long way to catch up to demand before customers start ordering again. “Overcapacity reached chronic proportions across the c-Si value-chain during 2011, and only stronger than anticipated end-market demand in 2012 will mitigate a painful and severe equipment spending downturn,” Colville writes. Look for the worst-hit suppliers in the c-Si ingot-to-module sector, with -60 percent to -70 percent declines in Y/Y revenues; only GT Advanced Technologies (née GT Solar) with exposure in polysilicon and downstream PV equipment (which enjoys a different spending cycle) expects “healthy” sales during and beyond 2012, he points out.