JA Solar in ‘made to order’ mode: capacity constrained on SECIUM cells

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

Cost savings, technology focus and inventory control were key takeaways from JA Solar’s third quarter 2011 conference call, held this week. In line with piers, rapid price declines and weaker than expected demand impacting revenue and margins thus leading to inventory write downs of US$21.7 million. JA Solar reported shipments (cell and modules combined) of 445MW, which was at the low end of guidance of 450MW, and represented an increase of 11% over the prior quarter. Revenue was reported at US$388 million, a decrease of 7.3% compared to the second quarter of 2011. JA Solar reported an operating loss of US$43.3 million compared with operating loss of US$31.7 million in the second quarter. Gross margin was negative 4.3% in the third quarter compared with negative 2.7% in the second quarter.

Shifting business

Peng Fang, CEO of JA Solar, noted in the conference call to discuss third quarter results that the company had a clear shift from customers wanting higher efficiency modules due to the better return on investment, especially since feed-in tariffs are moving downwards in key markets such as Germany. Fang partly put the increased shipments in the quarter down to this technology shift.

However, Fang also noted the shift in customer selection requirements, highlighting that, “Customers want to work with suppliers who can offer bankability, demonstrated product quality, a strong cash position and the healthy balance sheet.”

Despite this, JA Solar guided lower shipments for the fourth quarter of between 310MW and 330MW and revised downwards, full-year shipments to approximately 1.6GW, compared to previous guidance of 1.8GW.

Geographic breakdown of third quarter revenue was approximately 57% China and 43% international, not surprisingly suggesting that lower utilization rates at PV module manufacturers based in China were falling, reducing demand as approximately 67% of product mix in the second quarter had been for solar cells and 6% solar cell tolling.

There is also a shift in product mix shipments taking place. JA Solar noted that module shipments made up 27% of shipments in the second quarter of 2011, yet module shipments would be slightly higher than 35% of product shipment mix in the fourth quarter. This would increase to more than 50% in 2012, noted Fang in the call.

Despite the looming trade issues in the US, the company noted significant volume demand for modules from the US. Although management were reluctant to guide shipment levels in the first quarter of 2012, they hinted that the seasonally weak first quarter, due to European winter weather may have less of an impact as the US market was strong and not seasonal.

Manufacturing shift

Much attention in the call was given over to manufacturing and technology issues. Understandably, cost reduction strategies were discussed in detail but a key point made by management was the decision to produce to order, given the focus on inventory reduction and manufacturing cost containment. This was reflected in the shipment figures for the fourth quarter being close to actual production levels.

JA Solar said that inventory levels at the end of Q3 were US$190.6 million, a fall of US$63.7 million compared to Q2 2011. Having reduced inventory levels by approximately 25% from the previous quarter, JA Solar management said that inventory levels would come down in terms of megawatts and also dollar level, but wouldn’t be that significant in Q4.

With inventory control and made to order approach capacity expansions like the majority of its rivals have been curbed, impacting capital spending plans for 2012.

Management noted that CapEx and capacity planning hadn’t been nailed-down yet for next year but guided that there would not be any additional cell or wafer capacity added. Spending would be on equipment maintenance and certain upgrades hinting towards some module capacity spend, due to customer demand for high-performance modules, though spending in this area is significantly less than in wafer or cell areas. Overall, management said CapEx would much less than this year.

JA Solar spent approximately US$91 million on CapEx in Q3, primarily to finish off capacity expansion undertaken since the beginning of the year for new higher efficiency products.

With the shift in demand towards higher performing products, JA Solar said it was capacity constrained in this area for its SECIUM and Maple products. Approximately 20% of shipments are expected to be SECIUM or Maple products in Q4. Limited quasi-mono wafer volumes and new cell lines ramping were said to be the key reasons behind the current capacity constraints.. 

“For the fourth quarter the high efficiency cells will continuously decrease in the price, in the cost. So, probably we will be like 5% decrease. However, the volume right now for the high efficiency is very small. So, the major part of next year where we are ramping up the high efficiency product. In the mean time, we will reduce the cost significantly. So, eventually, we're mostly high-efficiency product that has the similar cost,” commented Fang.

JA Solar expects total module production cost to decline between 25 to 30% versus its total module production cost in Q3. But cost reductions would seem to be slowing as management guided total module cost would decline a further 5 to 8% from Q4 levels, while cell processing costs would go down a further 10 to 20% versus current levels. Module costs were said to come down approximately 10 to 15% by mid next year. Standard module products costs would be down to US$0.80 to US$0.85 by mid-Q4.

With a focus on process optimization, yield and further cost reductions on its high-efficiency lines, JA Solar said it had already made significant progress on improving cell efficiencies. Management noted in the call that its multi-crystalline solar cell efficiency reached a record average of 17%, up from an average of 16.8% previously. In particular, through additional process improvements and breakthroughs, its high efficiency Maple solar cell technology average efficiency now stood at 17.9%, with a peak efficiency in the 18% range.

The company said it would now be able to provide a module product in the 245W to 250W range. With additional optimization, it expects to produce modules in the 260W and 255W power range in volume by Q2 2012. 

In R&D, the company noted it was developing new technologies that included a roadmap to reach 30% cell efficiency, utilizing a p-type wafer. 

19 August 2021
The utility-scale PV market is poised for exponential growth and yet the industry still has many fundamental opportunities to improve on standards and best practice. Tracker shade loss has been one of those topics that deserve more attention, but has been typically handled by derate factors rather than trying to accurately forecast the loss over the life of the system. Join Nextracker’s subject matter experts, Aron Dobos and Neelesh Umachandran, and Rounak Kharait, director of solar energy assessments at DNV, for a webinar about why shade modeling matters and recommendations on what the solar industry should do about it.
25 August 2021
Energy Next is a new industry exhibition focusing on the latest renewable energy and energy efficiency technology, which will be held for the first time in 2021 in Sydney, Australia alongside the Clean Energy Council’s Australian Clean Energy Summit, the peak gathering of leaders driving Australia's energy transformation. Organised by the same people behind Australia’s largest clean energy event, All-Energy Australia, Energy Next will give visitors two days of access to key suppliers in the industry, free-to-attend professional development and industry workshops, and networking opportunities to better understand clean energy issues and solutions and learn about the latest developments in this transformational, dynamic sector.
25 August 2021
The Intersolar Summit Brasil Nordeste takes place in Fortaleza, Brazil. It addresses leading local and international experts on solar power and renewable energy in the region. The Summit’s mission is to provide in-depth education, enable high-quality networking opportunities, expand the use of PV technologies at regional and national level and strengthen the local PV industry. The Intersolar Summit Brasil Nordeste is organized by Intersolar South America - Latin America’s largest exhibition and conference for the solar industry: Solar Promotion International GmbH, Pforzheim, Freiburg Management and Marketing International GmbH (FMMI) and Aranda Eventos & Congressos Ltda, São Paulo as co-organizer.
25 August 2021
Join us to hear directly from the CTOs and heads-of-research from the top-20 cell/wafer producers to the PV industry today. The event will focus on predicting the key metrics underpinning the next big shift to n-type with answers to the key questions: When will the transition to n-type happen? Which companies will be first to 10 GW capacity and production? Who will be the key equipment suppliers for the new production lines? Which n-type process flow/architecture will emerge as the front-runner? What will polysilicon purity and wafer thickness levels look like for optimized n-type manufacturing? What will the upstream poly/wafer supply-chain look like in 5 years from now?
26 August 2021
In this webinar, JA Solar will present its product portfolio based on the latest technologies to improve your PV projects, ensuring maximum reliability and performance. During the webinar we will receive insight from JA Solar about its solar technology roadmap and how the manufacturer is providing customers with innovative solutions to suit their needs, while we will also analyse how to determine the best product solution for each solar project.
6 September 2021
The 38th European Photovoltaic Solar Energy Conference and Exhibition will be held online from 6 - 10 September 2021, allowing PV experts from all around the globe to participate with just one click! The EU PVSEC is the world's leading forum for PV Research and Development and the biggest Conference on PV Solar Energy worldwide. That is why PV experts from all around the globe are keen on gathering together each year to be part of this specialist’s event, to present and discuss the latest developments in Photovoltaics, to network and to conduct business.

Read Next

July 29, 2021
Tracker and racking provider Arctech has delivered SkySmart II tracking system to a 575MW agriculture-sharing solar project located in Nangong City, Hebei Province, China.
July 29, 2021
Unigreen Energy, owned by Hevel majority shareholder Ream Management LLC, has broken ground on a wafer and cell manufacturing plant that will produce 1.3GW of silicon n-type monocrystalline ingots and wafers as well as 1GW of heterojunction technology (HJT) solar cells.
July 29, 2021
Meyer Burger has revealed plans to launch a solar roof tile product, expanding its rooftop solar product range.
July 29, 2021
US residential solar installer SunPower has partnered with EV charging provider Wallbox to add EV charging technologies to its portfolio.
July 29, 2021
US residential solar installer Sunnova said it was investing in its end-to-end solar services to cater for customers demanding more from their rooftop installations.
July 29, 2021
The US Senate has passed a new bipartisan infrastructure bill after weeks of protracted discussions, establishing US$550 billion in new infrastructure funding as part of an investment described as “once-in-a-generation”.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
August 19, 2021
At 9am (PT) | 6pm (CEST)
Solar Media Events
August 25, 2021
Solar Media Events
October 6, 2021
Solar Media Events
October 19, 2021