Manufacturing overcapacity in the photovoltaic market has been observed for some time. One result, enunciated by NPD Solarbuzz in its latest PV Equipment Quarterly, is that firms are able to employ a "fabless" manufacturing strategy, whereby capacity in tier two or three manufacturers can be utilized by tier one manufacturers, rather than the firms adding more capacity themsleves.
The development is not happy news for solar equipment suppliers, which are set to see depressed spending continue through to 2014, according to NPD Solarbuzz. "Capacity available from tier two and tier three manufacturers in China has created a virtual fab with over 12 GW on offer," said NPD Solarbuzz VP Finlay Colville, in a statement released today. "Therefore, leading module suppliers in Japan and China can increase shipment levels well above in-house capacities while running internal lines as low as 80% utilization."
Colvilles "fabless" manufacturing strategy observation draws on semiconductor operations. The strategy in photovoltaics can be employed by tier one manufacturers using competitors capacity, which may be of a similar nature but is currently underutilized.
NPD Solarbuzz describes the strategy as being a "marriage of convenience," with tier one manufacturers having global sales and marketing operations, and bankability, with tier two and three capacity that can be used for OEM manufacturing. Much of this tier two and three capacity was added in 2011 and 2012. The "fabless" strategy allows tier one manufacturers to concentrate on gaining global market share while minimizing manufacturing CAPEX.
The major result of this "fabless" trend, notes NPD Solarbuzz, is that new capacity expansions will not be forthcoming until the second half of 2014. The market analysts further note that capacity from debt-laden firms, such as Suntech and LDK Solar, have not been absorbed by the remaining tier one players.
There has been mounting speculation that Trina Solar or Yingli may be interested in acquiring the stricken Suntech Wuxis assets.
In light of these developments NPD Solarbuzz paints a grim picture for equipment suppliers. It notes that manufacturing CAPEX remains at "maintenance-only" levels, with new orders for leading suppliers falling to nine-year lows.