Consolidation in Solar Wafer Industry

The solar wafer part of the solar supply chain has been one of the worst performing sectors in the solar industry. The reason is that solar wafer makers have lost bargaining power with their downstream customers, as most of them have backwardly integrated into production of ingots and wafers. Most of the big solar panel companies such as Yingli Green Energy (YGE), Trina Solar (TSL), Canadian Solar (CSIQ), JA Solar (JASO) etc. all have large wafer capacities and only buy some part of their requirements from external pure play wafer producers. The wafer companies have also suffered from large over-capacities just like the cell and panel guys. Not having access directly to customers, solar wafer makers have remained at the mercy of the panel companies. While solar panel companies have been enjoying profitability in the last few quarters, solar wafer makers continue to show operating losses.

GCL Poly through its massive 10 GW solar wafer capacity, has forced wafer prices to a very low level. The company is able to sell wafers at very low prices, pushing the smaller wafer makers out of the market. Now solar wafer companies are looking to sell themselves to bigger companies as they are unable to see a way to sustained profits. Most of them have been severely weakened by the 2 years of large losses. Many of the bigger wafer companies such as Renesola (RSOL) have diversified into solar cell and panel manufacturing to survive. Some like LDK Solar (LDK) are bankrupt, while the Taiwanese solar wafer makers like Green Energy Technology survive on domestic business.

Solar wafer industry will have to see a rationalization in capacity and consolidation as long periods of losses are not feasible. The whole solar industry is consolidating with hundreds of bankruptcies in the last few years and even large players such as Siemens, Bosch etc. having left the business. Solar wafer manufacturing will benefit as a few large players can bring rationality in pricing and also reduce costs through scale and technology.

Major China-based solar wafer makers reportedly have contacted Taiwan-based fellow makers about the possibility of mergers. Taiwan-based makers, due to continued operating losses arising from low product prices, may agree, according to industry sources…However, some Taiwan-based solar wafer makers think that although they are unable to compete with big China-based makers in production capacity and operational scale, they can capitalize on their advantage of more efficient production management, enabling their business for the niche market.

Source – DigiTImes