In its latest PV Equipment Quarterly report, market analyst Solarbuzz has said that photovoltaic equipment spending for crystalline silicon (c-Si) ingot-to-module and thin film panels is expected to fall 47 percent, from a predicted USD$14.2 billion this year to just $7.6 billion in 2012.
The company says the spending decline is a result of "ambitious" capacity expansions in the two areas both during 2010 and the first quarter of this year by tier 2 and 3 photovoltaic manufacturers.
"Coupled with market oversupply and strong inventory build through 2H11," says Solarbuzz, "this capacity-demand imbalance will usher in a significant cell manufacturer shakeout phase during 2012 to 2014."
As a result, Solarbuzz predicts that photovoltaic equipment revenues will be impacted in the second half of this year, and that companies will announce lower corporate guidance for 2012.
c-Si equipment suppliers are set to be hardest hit, says Solarbuzz, which expects to see sequential quarterly declines of 21 percent, 12 percent and 37 percent respectively from the fourth quarter of 2011 to the second quarter of 2012. Thin film spending is expected to behave similarly.
In a statement released, the company says: "Only c-Si equipment suppliers with an established upstream product portfolio and strong market shares (e.g. GT Solar, Meyer Burger, Applied Materials, and Jinggong) have been sheltered from the drop-off in equipment bookings during 1H11."
According to the report, equipment spending in the second quarter of 2011 declined from the first quarter by three percent, reaping just $3.6 billion. This is said to be the first decline for the sector since the second quarter of 2009 and is "indicative of an inflection-point within the current PV capital equipment spending cycle".
Finlay Colville, senior analyst at Solarbuzz comments: "Strong double-digit bookings and revenue growth through 2010 created a misleading picture for PV equipment suppliers. This was caused in part by aggressive expansion plans of second-tier c-Si manufacturers, and by the quantity of new thin-film fabs that were financed through the recent thin-film investment cycle.
"An artificial peak in equipment spending was created during 2010 and 2011, providing a short-term pull on equipment that was out-of-sync with the long-term requirements of the industry."
Solarbuzz believes that due to expansions across all tier categories, 2011 and 2012 will generate 51 gigawatts (GW) and 66 GW of annualized capacity respectively, from over 300 manufacturers.
"However," it says in a statement, "by filtering out the manufacturing capacity that is both cost-competitive and market-leading, the true significance of these capacity levels becomes apparent. Tier 1 cell manufacturers will account for 24 GW and 34 GW of capacity in 2011 and 2012, more than sufficient to meet global demand over this time period."
The company continues by stating that by 2015, tier 1 companies will comprise 70 percent of all photovoltaic equipment spending. Meanwhile, spending from tier 2 and tier 3 manufacturers is predicted to decline 60 percent year-on-year in 2012
"The cell manufacturer shakeout is a key factor driving the scale of the revenue reset and the phasing of equipment spending during the 2012-2015 period," says Solarbuzz.
As such, Colville believes tool suppliers will increasingly look to secure tier 1 supplier partnerships and competition will intensify.
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