Between 2006 and 2009, First Solar set clear benchmarks for all solar cell and thin-film panel manufacturers by expanding at unprecedented rates while, at the same time, commanding industry-leading capex, opex and yield metrics. Over this period, their rapid ascent to leading worldwide producer in 2009 with a (production) market share of 12% was an inevitable consequence of enacting meticulously on this game plan. Indeed, midway through 2009, projected global market demand for 2010 suggested that continuous improvement by First Solar in operating costs, production line throughput, and efficiency would be more than sufficient to retain — or even expand upon — current market share.
However, with the rapid upturn in demand through 2010 from key European markets, it has been tier 1 c-Si cell manufacturers within China and Taiwan who have reacted quickest to the requirement for immediate capacity expansion. Their pace here has been relentless; within 9 months, finance can be secured, tooling can be ordered, delivered, and signed off, and manufacturing capacity ramped up to maximum levels with >90% capacity conversion rates. And just to emphasize this point, 24 hours after First Solar announced their 2012 capacity expansions in Ohio and Vietnam, Yingli announced an incremental 700 MW of c-Si cell capacity to come online in Baoding and Hainan within the next 10 months. Moreover, 600 MW of this capacity will be comprised of Gen 2 high-efficiency c-Si cells (their ‘PANDA’ cells).
Analogous to First Solar’s success in replicating one production line to another, or from one fab to another, c-Si cell makers in China and Taiwan (including even tier 2 players this year) have performed a similar type of copy-smart approach with process tools and production lines. To this effect, purchasing standard tool types from leading c-Si equipment suppliers such as Rena, Roth and Rau, Amtech, Centrotherm, Schmid, Applied Materials (Baccini) and Despatch has become the modus-operandi for low-risk c-Si cell expansion.
Adapted from Solarbuzz’s new PV Equipment Quarterly report, the contrast between First Solar’s capacity expansion through 2010 and tier 1 c-Si cell manufacturers within China and Taiwan is clearly illustrated in the accompanying figure. Here, quarter-on-quarter growth rates for ramped manufacturing capacity are shown, covering the timeline Q1’08 to Q4’10. The change in dynamics throughout this year can be clearly understood now. Ramped manufacturing capacity growth by tier 1 Chinese and Taiwanese c-Si makers has exceeded double-digit Q/Q growth each quarter throughout 2010, while First Solar’s next capacity expansions in Malaysia and Germany will not come online until 2011.
With strong demand through 2010 rendering the top tier cell makers capacity constrained, it is ultimately annualized ramped capacity levels (not nameplate) that will determine the final rankings and market shares assigned. Forecasted year-end estimates point to First Solar’s market share (purely on a production comparison, not shipments) slipping from 12% during 2009 to around 6.5% for 2010. In ranking terms, current quarterly capacity conversion rates indicate that First Solar will be the third largest cell producer this year — even after third-party cell sourcing is factored out from the top c-Si cell players in China. Six out of the top ten cell producers this year will be c-Si cell makers located in China and Taiwan.
Looking forward to 2011 however, and with question marks over the size of key European markets, a demand constrained environment may somewhat negate the additional c-Si cell capacity in the pipeline across China and Taiwan. Vertically-integrated c-Si players who have consolidated cell making activities over the past 12 months may choose to return to upstream or downstream wafer/module comfort zones, thereby leaving the market less competitive for a select group of c-Si cell proponents or thin-film makers such as First Solar — regardless of capacity expansions rolled out across 2011.