On the back of component price declines, and subsequent tightening margins, gross margins for the whole photovoltaic industry are also projected to decline by 17 percentage points to 12.4 percent in Q4 2011.
The IMS Research has also shown that while module suppliers have suffered on the back of falling prices, they will still, "generate more than 50 percent of industry profits in 2011". Polysilicon suppliers will also enjoy high margins, but because of smaller revenues their profits account for only 19 percent of photovoltaic industry profits.
A lack of Chinese suppliers in the inverter market has also led to the highest margins in the photovoltaic industry being sustained, observed the research company. While only representing a small amount of total system costs, inverters will still capture 17 percent of the industry profits in 2011.
"Unlike the module market, in which Chinese suppliers account for roughly half of all shipments and revenues," comments Ash Sharma, "Chinese-branded inverters accounted for just three percent of industry revenues in 2010. This is likely to change however now that the domestic market in China is starting to take off. More than 1.5 gigawatts will be installed in China this year and the vast majority of projects will be using Chinese inverters."
Looking to 2012, IMS Research sees margins continuing to slide and in Q1 2012 has forecast margins of 10.4 percent.