PV book-to-bill in Q3’10 dips from previous eight-quarter high

In Q3’10 (ending September 30), the PV Book-to-Bill ratio fell after aneight-quarter high during Q2’10, to a three-month average of 1.16,according to new Solarbuzz PV Book-to-Bill analysis featured within thePV Equipment Quarterly report.

In addition, growth rates for thebacklog of solar photovoltaic manufacturing equipment returned tosingle-digit percentage levels, similar to trends observed at the end of 2008 following the last phase of strong PV tool ordering activity.Source: Solarbuzz, USA.

According to Finlay Colville, Senior Analyst at Solarbuzz, "The latest PVBook-to-Bill figures are a direct consequence of PV cell manufacturingequipment suppliers ramping up deliveries following the strong orderbacklog accumulated during 1H’10, and these figures were matched byrecord PV tool revenues reported by several leading PV suppliers duringQ3’10."

Historically, Book-to-Bill ratios have been widelyadopted by various technology sectors to assess their overall health. In general, a Book-to-Bill ratio of greater than 1 (or parity) isindicative of a strong market. Conversely, a Book-to-Bill ratio belowparity provides signs of an unhealthy environment with softeningequipment demand.

A Book-to-Bill ratio compares the total amountof orders received to the total amount of product shipped and billedwithin a given period. It is the ratio of demand versus supply in theequipment supply chain. If the supply chain receives the same level ofnew orders as it can deliver, this still represents a healthy scenario,but with scope for growth.

If the supply chain has fewer ordersthan it can deliver, this shows as negative growth. A PV Book-to-Billratio of 1.16 means that US$116 worth of orders were received by PVequipment suppliers for every US$100 of product billed for the preceding quarter under review.

Colville added: "Until now, there has been no Book-to-Bill information for the PV industry. Indeed, reporting onthe PV equipment supply chain as a whole has received less attentionwhen compared to other aspects of the solar industry. This has providedchallenges for equipment suppliers when seeking to benchmark theirperformance against both industry averages and process tool segmentswithin their served markets."

PV Book-to-Bill explains revenue growth patterns
During 2010, PV manufacturing equipment revenues will easily exceed the $10billion level, with Applied Materials recently becoming the firstequipment supplier to pass the $1 billion threshold for PV specifictools within a trailing twelve month trended period. Several other toolsuppliers will also report PV revenues during 2010 in excess of $500million.

While c-Si cells will account for 85-90 percent of PVproduction during 2010, the breakdown of PV equipment revenues bytechnology reflects a broader contribution from the c-Si and thin-filmsegments, indicative of continued investment into established andemerging production types.

In fact, the second cycle in thin-film fab investment is forecast to peak during 1H’11, with strong equipmentrevenues forecast from fabs currently at the build-out phase.

Incontrasting to on-going capacity expansions, downstream demand for PVmodules during 2011 is likely to be subject to a range of policy drivenuncertainties. Therefore, specific checks are urgently needed to monitor the level and timing of the most recently announced expansion plans for 2011, with a more robust means of assessing pending capacityover-supply within the industry among top tier producers.

The PVBook-to-Bill analysis provides a direct measure of equipment ordered byPV producers, existing tool backlogs with suppliers, and tools currently being delivered to PV fabs. With equipment lead times ranging from 3 to 12 months, changes in the PV Book-to-Bill figures provide a directmeans to assess whether announced expansion schedules are being enacted.

Source: Solarbuzz, USA.


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