Chinese Solar Manufacturers Decimated Not Only Competitors, But Also The Foreign Supply Chain

Original Post Source

The U.S. International Trade Commission reported on Sept. 22, 2017, that it found that low-cost, imported solar panels from China and other countries have hurt two domestic manufacturers: Georgia-based Suniva and Oregon-based SolarWorld. The decision is based on a petition filed by bankrupt Suniva in April 2017 under Section 201 of the 1974 Trade Act, claiming that imported cells and modules had caused “significant harm” to America’s solar manufacturing base. In May 2017, SolarWorld AG’s U.S. unit joined the trade case.

Suniva requested a four-year tariff schedule on crystalline-silicon solar products imported from anywhere in the world:

Thus, petitioner seeks a recommendation to the President of four years of relief of an initial duty rate on cells of $0.40/watt, along with an initial floor price on modules of $0.78/watt.

Opposition came from numerous U.S. solar companies:

The tariffs requested by Suniva would more than double the price of solar panels in the U.S., undercutting the cost-competitiveness of solar and reversing its high growth trajectory. We would be forced to cut our operations, seriously endangering manufacturing jobs at our factories. … We have been building our companies to meet demand from a large and growing domestic solar market. That market is now under threat. As true U.S. solar manufacturers, and on behalf of our 5,700 workers, we ask that you not grant Suniva’s request for global safeguard measures.

This petition and opposition came a bit late, as the U.S solar industry is already decimated. That’s true not only for the U.S., but for the entire non-Chinese solar industry. In 2016, Chinese companies produced 65% of global solar installations, compared to 5% for U.S. companies and 5% for European companies.

I discussed this issue in an Oct. 25, 2016, Seeking Alpha article titled “China’s EV Battery Industry Could Be A Repeat Of Solar And Rare Earth Dominance.” I’ll repeat part of what I wrote in that article to reinforce my argument in this article, which comes from The Information Network’s report titled “Opportunities in the Solar Market for Crystalline and Thin Film Solar Cells.”

2009 to 2010

Bankrupt, closed, acquired

Advent Solar (emitter wrap-through Si) acquired by Applied Materials

Applied Solar (solar roofing) acquired by Quercus Trust

OptiSolar (a-Si on a grand scale) closed

Ready Solar (PV installation) acquired by SunEdison

Solasta (nano-coaxial solar) closed

SV Solar (low-concentration PV) closed

Senergen (depositing silane onto free-form metallurgical-grade Si substrates) closed

Signet Solar (a-Si) bankrupt

Sunfilm (a-Si) bankrupt

Wakonda (GaAs) closed

2011

Bankrupt, closed

EPV Solar (a-Si) bankrupt

Evergreen (drawn Si) bankrupt

Solyndra (CIGS) bankrupt

SpectraWatt (c-Si) bankrupt

Stirling Energy Systems (dish engine) bankrupt

Acquisition, sale

Ascent Solar (CIGS) acquired by TFG Radiant

Calyxo (CdTe) acquired by Solar Fields from Q.cells

HelioVolt (CIGS) acquired by Korea’s SK Innovation

National Semiconductor Solar Magic (panel optimizers) exited systems business

NetCrystal (silicon on flexible substrate) acquired by Solar Semiconductor

Soliant (CPV) acquired by Emcore

2012

Bankrupt, closed

Abound Solar (CdTe) bankrupt

AQT (CIGS) closed

Ampulse (thin silicon) closed

Arise Technology (PV modules) bankrupt

Azuray (microinverters) closed

BP (c-Si panels) exits solar business

Centrotherm (PV manufacturing equipment) bankrupt

CSG (c-Si on glass) closed by Suntech

Day4 Energy (cell interconnects) delisted from TSX exchange

ECD (a-Si) bankrupt

Energy Innovations (CPV) bankrupt

Flexcell (a-Si roll-roll BIPV) closed

GlobalWatt (solar) closed

GreenVolts (CPV) closed

Global Solar Energy (CIGS) closed

G24i (DSCs) bankrupt in 2012, re-emerged as G24i Power with new investors

Hoku (polysilicon) shut down its Idaho polysilicon production facility

Inventux (a-Si) bankrupt

Konarka (OSCs) bankrupt

Odersun (CIGS) bankrupt

Pramac (a-Si panels built with equipment from Oerlikon) insolvent

Pairan (Germany inverters) insolvent

Ralos (developer) bankrupt

REC Wafer (c-Si) bankrupt

Satcon BOS bankrupt

Schott (c-Si) exits c-Si business

Schuco (a-Si) shutting down its a-Si business

Sencera (a-Si) closed

Siliken (c-Si modules) closed

Skyline Solar (LCPV) closed

Siemens (CSP, inverters, BOS) divestment from solar

Solar Millennium (developer) insolvent

Solarhybrid (developer) insolvent

Sovello (Q.cells, Evergreen, REC JV) bankrupt

SolarDay (c-Si modules) insolvent

Solar Power Industries (PV modules) bankrupt

Soltecture (CIGS BIPV) bankrupt

Sun Concept (developer) bankrupt

Acquisition, fire sale, restructuring

Oelmaier (Germany inverters) insolvent, bought by agricultural supplier Lehner Agrar

Q.Cells (c-Si) insolvent, acquired by South Korea’s Hanwha

Sharp (a-Si) backing away from a-Si, retiring 160 of its 320 megawatts in Japan

Solibro (CIGS) Q-Cells unit acquired by China’s Hanergy

Solon (c-Si) acquired by UAE’s Microsol

Scheuten Solar (BIPV) bankrupt, then acquired by Aikosolar

SolFocus (CPV) layoffs, restructuring for sale

Sunways (c-Si, inverters) bought by LDK, restructuring to focus on BIPV and storage

2013

Bankrupt, closed

Bosch (c-Si PV module) exits module business

Concentrator Optics (CPV) bankrupt

Suntech Wuxi (c-Si) bankrupt

Acquisition, sale, restructuring

Diehl (Germany inverters) inverter division sold to PE firm mutares AG

ISET (CIGS) moving into “microsolar”

MiaSolé (CIGS) acquired by China’s Hanergy

Nanosolar (CIGS) restructuring for sale

NuvoSun (CIGS) acquired by Dow

Twin Creeks (kerfless Si) acquired by GT Advanced Technology

Wuerth Solar (installer) business turned over to BayWa

2014

Bankrupt, closed

Areva’s solar business (CSP) closed

HelioVolt (CIGS thin-film PV) closed

LDK (vertically integrated module builder) filed for bankruptcy

Masdar PV (a-Si) closed its SunFab-based amorphous silicon PV factory in Germany

SolarMax (PV inverters) – Swiss inverter maker SolarMax’s parent firm, Sputnik Engineering, filed for insolvency

Sopogy (small-scale CSP) closed

TEL (a-Si) withdrew from its a-Si solar business

Xunlight (a-Si) went bankrupt

Acquisition, sale, restructuring

Emcore’s CPV business – Suncore acquired the remaining interest in Emcore’s CPV business

RSI (CdTe PV panels) sold to Chinese strategic

Solar Junction (CPV semiconductors) sold to Saudi strategic

SAG Solarstrom, a bankrupt PV project developer, was sold to Shunfeng Photovoltaic, the owner of PV panel builder Suntech

2015

Bankrupt, closed

Enecsys (microinverters) bankrupt

QBotix (trackers) closed

Solar-Fabrik (c-Si) bankrupt

Soitec (CPV) closed

TSMC (CIGS) closed

So, clearly, the non-Chinese solar manufacturing industry is already decimated. Table 1 below lists the top 10 solar module suppliers for 2015 and 2016. Of these, only Motech (Taiwan) and First Solar (U.S) are non-Chinese manufacturers.

Table 1 – Top 10 Solar Module Suppliers 2015-16

Rank

Company

2015

Shipments (MW)

2016

Shipments (MW)

1

Jinko Solar (NYSE:JKS)

4,510

6,650

2

Trina Solar (TSL)

5,740

6,450

3

JA Solar (NASDAQ:JASO)

5,390

5,950

4

Canadian Solar (CSIQ)

4,705

5,230

5

Hanwha SolarOne

3,335

4,900

6

Motech

2,415

2,950

7

First Solar (NASDAQ:FSLR)

2,875

2,500

8

LONGi Solar

900

2,340

9

Yingli (YGE)

2,375

2,170

10

ReneSola (NYSE:SOL)

1,600

1,200

Source: The Information Network

The dominance of the Chinese solar industry extends down the supply chain, and the solar equipment companies have experienced a similar diminution in revenues.

Shown in Table 2 (below) is a list of revenues of top solar equipment suppliers for 2010, 2011, and 2016. Not only have revenues dropped significantly, but many of the suppliers have experienced several financial difficulties.

Table 2 – Non-Chinese Equipment Suppliers

$ Millions

2010

2011

2016

Notes

Meyer Burger

883

1405

519

Top PERC Equipment Supplier

Applied Materials (AMAT)

1481

1990

157

Moved PV revenues to Corporate and Other segment 2016

Centrotherm

849

804

115

Supplier of batch furnaces and PECVD

Ulvac

380

100

52

Merged PV revenues with FPD

GT Advanced Technologies

618

530

Returned from Chapter 11 in 2016

Schmid Group

540

535

159

Leading supplier of turnkey manufacturing solutions

RENA

292

413

Exited insolvency, named new CEO 2015

Roth & Rau AG

410

291

Merged with Meyer Burger 2015

Source: The Information Network

In 2010, global solar manufacturers shipped 17.0 gigawatts (GW) of solar modules, followed by 30.3 GW in 2011. In the intervening five years, growth continued an average of 19.5% per year, culminating in 78.3 GW shipped in 2016. The nearly 400% increase in shipments between 2010 and 2016 should have been a staging area for significant revenue growth for the equipment companies listed in Table 2, but it wasn’t. Instead, an entire infrastructure of equipment and material suppliers was developed in China.

I’ve listed a several types of equipment and materials in Table 3 (below). It illustrates that Chinese companies now make up a large percentage of the total number of companies participating. Some of the more complex types of equipment such as Screen Printing, Deposition/Cleaning, and Wafer Cutting are still dominated by foreign companies, primarily German companies. The number of U.S. equipment companies remaining in the market are fewer than their Chinese counterparts.

In the material sector, Chinese suppliers clearly dominate.

Table 3 – Number of Solar Equipment and Materials Companies – Chinese, U.S., Other

Equipment

Number of Companies

Chinese

% Chinese

U.S.

% U.S.

% Other

Cleaning

39

25

64%

4

10%

26%

Screen Printing

36

8

22%

5

14%

64%

Diffusion

51

19

37%

15

29%

33%

Wet/Dry Etching

64

21

33%

17

27%

41%

Deposition/Coating

98

21

21%

17

17%

61%

Wafer Cutting

56

24

43%

4

7%

50%

Materials

Companies

Chinese

% Chinese

Silver/Aluminum Paste

71

36

51%

9

13%

37%

Wafer Cutting Slurry

105

81

77%

6

6%

17%

Source: The Information Network

Investor Takeaway

Not only have most U.S. solar manufactures exited the market, the entire supply chain has been decimated, particularly for U.S.-based companies. I noted in my above-mentioned article that China’s dominance of the Rare Earth industry was not only mining, but also refining and making end products such as rare earth magnets for EVs and wind turbines:

Based on industry estimates, rebuilding a U.S. rare earth supply chain may take up to 15 years and is dependent on several factors, including securing capital investments in processing infrastructure, developing new technologies, and acquiring patents, which are currently held by international companies.

That said, the solar supply chain might be lost to U.S. equipment and material manufacturers. Based on the ruling on the Suniva and SolarWorld case, the U.S. supply chain could be further negatively impacted.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

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