Quantifying and Analyzing PV Industry Q3’09 Results
IMS Research
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Revenuessurged for most layers of the PV supply chain in Q3?09, as shown inFigure 1. This data is segmented by primary output of the company, so acompany that produces wafers, cells and modules but primarily sellsmodules would be considered a module company. Module revenues were up32% Q/Q, cell and wafer revenues were each up 36% Q/Q, revenues frompoly/wafer companies were up 6%, and equipment revenues were down 20%Q/Q. Strong demand from Germany was the primary source of the growth.After a few consecutive quarters of minimizing procurement to depletehigh inventories as demand remained weak, companies throughout thesupply chain began ordering the wafers, cells and modules they neededto meet demand in Q3?09 and the anticipated strong Q4?09. We expect tosee polysilicon revenues rebound sequentially in Q4?09 now that waferinventories have fallen and polysilicon price reductions have slowedsignificantly. The equipment market was down due to the existingoversupply.
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Ona Y/Y basis, companies that make modules actually showed a slightincrease in revenues despite significant ASP declines. This was aresult of higher volumes as well as additional revenue sources throughsystem sales as they looked to capture downstream margins and improvetheir demand visibility. The PV industry seems to be one of the fewindustries where companies are looking to increase their value addedthese days while older, more established companies seem to be spinningoff as much as possible. Cell and wafer company revenues were down 33%and 34% respectively on sharply lower prices as well as the increasedvertical integration of their customers reducing their relative totalavailable market.
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Speakingof ASPs, we are showing volume weighted average module prices for thinfilm and crystalline silicon modules at an average of $2.06/W, as shownin Figure 2. Prices for c-Si only would be about $0.10 higher. Becausethin film prices have been falling more slowly than module prices, themodule ASP decline was slower than cell, module and wafer ASP declines.Cell ASP declines are down around 55% Y/Y, with wafer ASPs down 65% andpolysilicon spot prices down 82%. This industry is clearly not for theweak at heart. We are encouraged by single digit Q/Q declines inpolysilicon ASPs from the standpoint that it should lead to greaterprice stability in the market, which should encourage those waiting forfurther price reductions to purchase now.
Figure 2: Q3’08 – Q3’09 PV Supply Chain ASPs by Segment
Source: IMS Research’s PV Supply Chain Health Report
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Interms of gross margins, big improvements were made by cellmanufacturers rising from 0% in Q2?09 to 7% in Q3?09, as shown inFigure 3, and wafer manufacturers, -45% in Q2?09 to 12% in Q3?09, whichwrote off significantly less wafer and cell inventory than in previousquarters. Polysilicon and equipment companies continue to have thehighest gross margins.
Figure 3: Q3’08 – Q3’09 PV Supply Chain Gross Margins by Segment
Source: IMS Research’s PV Supply Chain Health Report
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Interms of operating margins, similar improvements were shown for cellsif we exclude Q-Cells, which is undergoing significant restructuring.Polysilicon, on the other hand, had negative operating margins for thesecond consecutive quarter on various restructuring efforts at theexisting players. Equipment manufacturers suffered from negativeoperating margins for the third consecutive quarter on shrinking toolshipments.
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Lookingat regional growth for cells and modules, sharp gains were achieved byChina, Japan and Taiwan, as shown in Figure 4, while the US and Germancompanies grew significantly slower on lost market share. On a Y/Ybasis, US companies have the highest growth, though, due to FirstSolar’s rapid annual growth. Japan has the second fastest growth on newstimulus efforts there, with Germany and Taiwan suffering from lostshare.
Figure 4: Q3’08 – Q3’09 Cell/Module Supply Chain Growth by Region
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Interms of operating margins by region, the US led with 17%, followed byChina at 11%. Japan and Taiwan margins were the lowest.
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Interms of shipments, module volumes were up 49% Q/Q and 82% Y/Y for theincluded manufacturers to 1.4GW, as shown in Figure 5, while cellmanufacturers were up 61% Q/Q and 42% Y/Y to 540MW. On a Y/Y basis, thecell manufacturers’ share of output has fallen from 33% to 28% asmodule manufacturers increasingly look to lower their costs byproducing cells in house. Utilization for the cell and modulemanufacturers included in this report improved from 62% in Q2?09 toover 80% in Q3?09.
Figure 5: Q3’08 – Q3’09 Cell and Module Shipments
Source: IMS Research’s PV Supply Chain Health Report
For any questions, please contact me at ross.young@imsresearch-usa.com or call at (512) 302-1977 (512) 302-1977.
Figure 1: Q3’08 – Q3’09 PV Supply Chain Revenues by Segment Source:IMS Research’s PV Supply Chain Health Report. Based on the followingcompanies: Applied Materials, Arise Technologies, Bosch Solar, CanadianSolar, Centrotherm, China Sunergy, DelSolar, Energy Conversion Devices,E-Ton Solar, Evergreen Solar, First Solar, GCL-Poly, Gintech, GreenEnergy Technology, GT Solar, JA Solar, LDK, MEMC, Motech, NSP,Oerlikon, Q-Cells, REC, ReneSola, Roth&Rau, Sanyo, Sharp,Sino-American Silicon, SolarFun, SolarWorld, Spire, SunPower, Suntech,Sunways, Trina Solar and Yingli Green Energy.
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IMS Research was founded in 1989 in the United Kingdom by former semiconductor industry executives. It has become a leading market research firm in a number of electronics segments including semiconductors, wireless communications, automotive, power, factory automation, consumer electronics and security. IMS Research is aggressively pursuing supply chain coverage of the PV industry, leveraging its dominant position in the inverter market. To accelerate this goal, it acquired Young Market Research (YMR) in November 2009. YMR’s CEO Ross Young is now SVP of PV and Displays at IMS Research covering the entire PV supply chain. Prior to forming YMR, Ross Young was a VP at Samsung Electronics and General Electric in the TV space and was founder and CEO of DisplaySearch. Prior to forming DisplaySearch, he held marketing positions in the semiconductor and flat panel equipment markets at GCA, Fusion Semiconductor, Brooks Automation and OWL Displays. He has also authored a book on US-Japan semiconductor competition called Silicon Sumo published by the University of Texas. He can be reached at ross.young@imsresearch-usa.com.