Worried looks and optimism

Dear readers,
There was no beating around the bush at this year’s SEMI Europe PV Fab Managers Forum in Berlin. The main problem for the industry continues to be substantial global overcapacities. IHS estimates worldwide production capacity for modules this year to be roughly 59 GW, for cells approximately 48 GW and around 56 GW for solar-grade polysilicon. Although the additional installations of approximately 35 GW (an increase of 10-15% compared to 2012) expected by IHS this year will help to close the gap between supply and demand, the backlog remains.
And the coffers have to be replenished. Large sections of the industry have not been making any money. Even the big manufacturers like Yingli, Canadian Solar and Trina were in the red for more than a year. Suntech has been particularly shaken. The world’s market leader up to now is currently regarded as “technically insolvent.” Equipment suppliers are not doing any better either. According to Solarbuzz, their sales collapsed from more than US$13 billion in 2011 to $2.5 billion in 2012. Even Applied Materials was not doing well within its solar segment last year, and now there are rumors that Applied Materials plans to abandon the PV business altogether.
Although Solarbuzz expects to see slight recovery on the global PV equipment market, between $3.5 billion to $4 billion approximately this year, with all probability more big companies are expected to be hit. There will only be limited demand for new technologies, industrial representatives stressed with worried looks at the SEMI Fab Managers Forum. At PV Expo Tokyo the mood was completely different. In fact it was the first solar trade exhibition in a long time where optimism prevailed. In front of several exhibition booths the crowds were so large that you could hardly pass through them. The crowds of visitors reflect the booming Japanese market, which has been growing faster than forecasted since Fukushima, particularly since the introduction of attractive FITs last summer (see pages 22, 26).
Analysts meanwhile anticipate that Japan will overtake Germany, the U.S. and Italy with additional installations of more than 5 GW this year. As a result of a preference for high quality products in Japan, new sales prospects are offered for international suppliers with sophisticated offerings. However, the interesting question will be how the government steers growth to ensure the bubble does not burst after a short period. Even if the FIT is reduced by 10% at the beginning of April as announced, profit margins will still be in the double-digit range.
A point to watch is if the 48 nuclear reactors that currently are still shutdown are actually powered up again as announced by Japan’s newly elected Prime Minister Shinzo Abe. Still, if the Japanese market grows as strongly as expected, and the USA, China and Latin America recover, 2013 will probably remain a lean year for the industry – with the prospect of sunnier times ahead.
I hope you enjoy reading this new issue.
Hans-Christoph Neidlein, Editor in chief