Enphase targeting microinverter manufacturing capacity of up to 20 million units in 2021

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Leading microinverter supplier Enphase Energy reported record full-year revenue and shipments in 2020, driven by an ongoing transformation in its contract manufacturing supply chain that will enable the company to supply between 16 million to 20 million microinverter units in 2021, should demand allow.

Enphase shipped almost 7 million microinverter units in 2020, a new record, despite slashing production by around 1 million units due to COVID-19 impacting demand in the second quarter.

Enphase shipped almost 7 million microinverter units in 2020

The impact of US import taxes on Chinese electronics goods became the catalyst for Enphase to diversify its contracted manufacturing base and expand capacity in 2019 due to increased demand. But the company has noted it has suffered from critical electronic component shortages that had seen shipments stagnate in the preceding years.

Establishing contract manufacturing lines in Mexico and India, while limiting production in China, has led to significant leaps in the company’s ability to ship microinverters on a quarterly basis.

Quarterly leaps in shipments were due to expanded capacity in Mexico and India

The significant quarterly shipment change started in 2019 and the clear impact of greater manufacturing capacity can be seen after re-ramping production in Q3 and Q4 2020.

In the earnings conference call, Badri Kothandaraman, president and chief executive officer of Enphase Energy said, “Our operations team did a great job flexing manufacturing as 2020 played out. When the pandemic began, we cut manufacturing in Q2 of 2020 and then had to quickly ramp back up to meet the surge in demand in Q3 and Q4.

“The production in Q4 was more than two times the level in Q2. I am very pleased with the ramp of our Mexico factory that met our target of producing more than 1 million units in Q4.”

Kothandaraman also noted in the call that its India plant started volume production of microinverters in October 2020 and shipments started during Q4. The plant was said to have an initial quarterly production capacity of 0.5 million units, while a second line was also being readied for production.

“The production ramp is going very well, and we expect to produce approximately 400,000 microinverters in India in Q1,” noted Kothandaraman.

The Enphase executive also said that the company is aiming to have the manufacturing capacity to potentially ship between 4 million to 5 million units per quarter by the end of 2021, should demand require that level of shipments. This equates to having an annual capacity of between 16 million to 20 million units later in 2021.

Financials

Enphase reported fourth quarter 2020 revenue of US$264.8 million, a new record for the company.

On a geographical basis, the US accounted for 82% of the total revenue, while international sales accounted for 18% of the total.

Annual revenue reached a record US$774.4 million, up from US$624.3 million in the previous year.

Enphase reported fourth quarter 2020 revenue of US$264.8 million, a new record for the company

With greater manufacturing scale and streamlined product portfolio, gross margins have more than tripled in three years. Enphase reported full-year 2020 gross margin of 44.7%, its highest level to date.

Average Annual gross margins reached 44.7% in 2020

Guidance

Enphase guided first quarter 2021 revenue to be in the range of US$280 million to US$300 million, while gross margins are expected to be between 38% to 41%.

While Enphase noted in the earnings call that it was experiencing constraints on a few semiconductor components for its microinverters, those constraints are expected ease in the second quarter of 2021.

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