After a buying spree in 2010, 2011 has seen tough price wars among PV module suppliers. The victim is gross margins, as competitive pricing has pushed down gross margins more than 25% in 6 months, according to IMS Research.
July 19, 2011 — After a buying spree in 2010, 2011 has seen tough price wars among photovoltaics (PV) module suppliers. The victim is gross margins, as competitive pricing has pushed down gross margins more than 25% in 6 months, according to IMS Research. Suppliers have not been able to cut their costs to match their price decreases.
In just the last 6 weeks, PV module suppliers have dropped prices 15%, shows IMS Research’s quarterly report. Average crystalline PV module prices had been close to $1.80/W in Q1 2011; these modules are now consistently priced below $1.40/W. Also read: Capacity conundrum: Happy consumers, worried suppliers
|Figure. Global total PV module gross profit, Q2 2010 – Q4 2011 ($ billion). SOURCE: IMS Research July 2011.|
Polysilicon spot prices are also falling — 30% down since the end of 2010 — but contract prices have remained stable. This does not allow module suppliers the wiggle room in cell and wafer spending to offset PV module price declines. Average polysilicon prices are holding above $50/kg.
Vertically integrated Chinese Tier-1 c-Si PV suppliers boast “some of the most competitive cost structures” in the field, said Sam Wilkinson, senior market analyst at IMS Research, noting that these companies operated with high-twenties gross margins in 2010, peaking in Q3 2010. The current price war is really pressuring Chinese vertically integrated supplier margings, which could drop below 20% by Q3 2011, said Wilkinson. Tier-2 suppliers will suffer even lower margins.
IMS Research estimates that the total gross profit generated by the global PV module supplier base, which averaged around $2.5 billion/quarter in 2010, declined sequentially by close to 40% in Q1 and Q2 2011, due to reduced margins and declining shipments. Demand should pick up in H2 2011, as oversupply thins out, and profits will begin to recover. IMS Research predicts PV module supplier gross profit growth in Q3 and Q4 2011.
Access the quarterly report here: http://www.pvmarketresearch.com/report-template.php?report_id=2067
IMS Research is a leading independent supplier of market research and consultancy to the global electronics industry, offering syndicated market studies, bespoke research and consultancy services. IMS Research has been publishing research on the global PV market since 2007. Learn more at www.pvmarketresearch.com