PV equipment book-to-bill crashes; polysilicon equipment is the exception

In Q3 2011, the consolidated PV Book-to-Bill fell to an all-time low of 0.44, according to Solarbuzz. This signals the end of the PV equipment buying cycle, and future capex across the entire ingot-to-module chain is projected to be in-phase and governed by traditional supply/demand dynamics.

November 11, 2011 — In Q3 2011, the consolidated PV Book-to-Bill fell to an all-time low of 0.44, according to analysis featured in the Solarbuzz PV Equipment Quarterly report. This plunge signals an end to the PV equipment spending cycle of 2010-2011, Solarbuzz reports.

The recent PV fab spending cycle saw aggressive investments across all manufacturing tiers with one main goal: GW capacity.

New orders for PV fab equipment continued to decline, caused by deferred and cancelled expansions by solar cell makers. Tool shipments were high in H2 2011, helping suppress the book-to-bill ratio well below parity. H1 2011 expansions have finally given way to the diminishing demand in the field. This is the consensus in IMS Research’s recent findings as well.

Growth management is the new goal, says Finlay Colville, senior analyst at Solarbuzz.

Expansion deferred:

The PV Book-to-Bill ratio compares new-order-intake to revenues-recognized by the PV equipment supply-chain within a given period. It summarizes the overall balance of demand to supply for PV manufacturing equipment. A PV Book-to-Bill ratio of 0.44 for Q3 2011 means that US$44 million of new order intake was booked by PV equipment suppliers for every US$100 million of recognized shipment revenues.

Figure 1. Consolidated PV book-to-bill analysis through Q4 2012. Source: Solarbuzz PV Equipment Quarterly.

With high barriers-to-entry, long plant build-outs, and finite periods between tool shipment and revenue recognition, polysilicon equipment spending cycles are fundamentally different to the ingot/wafer and cell/module stages. This is characterized by a polysilicon book-to-bill ratio projected to remain above parity during 2H 2011 and 2012.

Historically, the wafer/ingot spending cycles have lagged behind cell/module investment phases by one or two quarters. Now that upstream ingot/wafer vertical integration by leading c-Si tier 1 companies is largely complete, future capex across the entire ingot-to-module chain is projected to be in-phase and governed by traditional supply/demand dynamics.

?PV equipment suppliers have experienced cyclical downturns before, only to bounce back quickly with record bookings activity. This industry downturn is so severe and the excess capacity so large that it will embrace not just a period of low capacity utilization, but also corporate failures that will be necessary to take capacity out of the system,? added Colville.

Figure 2. Trailing 12 month PV book-to-bill ratios for the c-Si value chain. Source: Solarbuzz PV Equipment Quarterly.

The technical and financial metrics that underpin the PV Book-to-Bill analysis are featured within Solarbuzz PV Equipment Quarterly reports. This includes quarterly revenues, bookings and backlogs for leading PV equipment suppliers forecasted four quarters out, complemented by process tool equipment spending for leading suppliers active within each tool sub-segment. The Solarbuzz PV Equipment Quarterly features a comprehensive capacity and production database, incorporating proprietary Solarbuzz industry knowledge across over 380 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 reworked each quarter and includes technology and spending trends for over 1,300 capacity expansion phases at 640 fabs out to Q4?15. Learn more at contact@solarbuzz.com, or call Charles Camaroto at 1.516.625.2452 for more information.

Solarbuzz, part of The NPD Group, is a globally recognized market research business focused on solar energy and photovoltaic industries.

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