Outsourcing PV panel production growing trend among manufacturers


Dramatic growth in market demand and efforts to reduce costs are driving a module production outsourcing trend among the world's leading crystalline module manufacturers, according to research and consulting firm GlobalData.

Out of the top crystalline module manufacturers — Yingli Green Energy, Trina Solar, Sharp Corporation, Canadian Solar and JinkoSolar — only Trina and JinkoSolar utilize their own module production fabrication lines without outsourcing, says Ankit Mathur, GlobalData's project manager for alternative energy.

The other companies, including global market leader Yingli, have a less-than-68% factory utilization rate, according to GlobalData. "However, these firms are still able to boast substantial module manufacturing under their own brand names by outsourcing their production to Original Equipment Manufacturer (OEM) partners."

Mathur adds: "Sharp Corporation's recent announcement that it will outsource its entire module production from 2014 signifies that most of the leading companies are taking the outsourcing route.

"This is due to a massive increase in global market demand, which is difficult for manufacturers to meet using their existing production capacity. Attempts to reduce other costs, such as logistics costs related to transporting modules from the factory to the customer, are also contributing factors."

The market research firm says key manufacturers were able to leverage upon plummeting silicon prices to reduce module production costs until last year. "However, the expected price recovery of polysilicon in 2014 will make it difficult to implement such reductions further."

As a result, companies will either outsource their entire production capacity to OEMs, or produce a certain proportion of modules from their production lines and source the rest from OEM partners, Mathur predicts.

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