Major shakeout expected in PV supply chain

PARIS – The number of companies participating in the manufacturing of photovoltaic (PV) supply solar panels is expected to drop by 70 percent this year, from about 500 in 2012 to about 150 in 2013, according to market research firm IHS iSuppli.

In its latest report, IHS said the PV supply chain is now experiencing major consolidation driven by falling prices, mounting losses and massive operational costs.

"It would be a major understatement to say that consolidation is occurring in the PV supply chain this year," said Mike Sheppard, senior photovoltaics analyst with IHS, in a statement. "Most upstream PV supply operations will simply cease to exist, rather than being acquired by other companies. Most of these suppliers actually have already stopped production—and will never restart."

IHS noted that companies with the highest risk of closing include integrated suppliers that manufacture PV polysilicon, ingots, wafers and cells. The cause is the financially unsustainable cost of building integrated facilities.

Second- and third-tier suppliers of crystalline silicon (c-Si) polysilicon, ingots, wafers and cells also will struggle this year in markets that do not have local-content requirements, according to IHS. Many of them will not be able to float operations for a very long period of time, IHS said.

For second-tier module manufacturers, the research firm said the key to surviving in 2013 will be establishing and maintaining strong relationships with downstream players in the emerging markets. Second-tier manufacturers must move faster than those in the top tier to grab mindshare early.

Finally, IHS said it anticipates that thin-film cell providers will experience low sales and limited market sizes in 2013, specifying that they will have to adopt similar survival strategies as the second-tier c-Si module suppliers. "This will be particularly true if pricing for thin-film modules doesn’t remain competitive with c-Si during the year. If thin-film pricing does not decline at the same rate as c-Si, the technology will be relegated to select niche markets that generate scant demand," IHS concluded.

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