While Q4 2011 will slow the decline in PV industry — polysilicon, wafer, cell, module, and inverter — profits and margins, it won’t be able to stop the drop. Q1 2012 will see gross PV margins at 10.4%, according to IMS Research.
October 12, 2011 — Photovoltaic (PV) component profits will fall by 70% year-on-year (YOY) in Q4 2011, according to IMS Research. The combined polysilicon, wafer, cell, module, and inverter solar industries will see gross margins drop by 17 percentage points YOY to just 12.4% that quarter, victim to the 2011 price collapse in PV modules, said Ash Sharma, senior research director for PV at IMS Research.
Though margins and profits will squeak up sequentially (quarter-to-quarter) in Q4 — total industry profit will increase 10% over Q3 — margins will slide in 2012, equaling 10.4% come Q1 2012.
Also read: PV price slide takes down revenues through 2012
PV module suppliers have suffered a prolonged price collapse starting late in 2010, but IMS Research found that they still hold the majority of PV component profits: more than 50%. Within the PV module supply chain, polysilicon suppliers historically have highest margins (average >30% in 2011), but their profits are less than half those of module suppliers. “Polysilicon suppliers will only generate 19% of industry profits due to their relatively lower revenues,” Sharma explained.
Inverter suppliers now enjoy the highest gross margins, despite recent oversupply and price cuts. PV inverter suppliers will hold about 17% of total PV industry profits in 2011, despite the small portion of PV system costs that an inverter represents. “Chinese suppliers have so far failed to gain a significant foothold,” Sharma notes, with Chinese-branded inverters making up about 3% of 2010 industry revenues. By contrast, Chinese suppliers account for half of all module shipments and revenues. As China’s domestic PV pipeline grows, look for Chinese inverters to make more of a mark.
Detailed analysis of supply and demand dynamics in the PV market is available from IMS Research at www.pvmarketresearch.com.
IMS Research?s Sam Wilkinson will be presenting at Solar Power International (SPI) 2011 in Dallas, TX, October 17-20, on the global and US supply and demand of PV components.