JA Solar to expand solar cell and module capacity by 20%; mulls overseas expansion

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Major PV manufacturer, JA Solar said it was planning to expand both solar cell and PV module capacity by around 20%, in order to keep in alignment with expected global market growth in 2015. 

The company reported higher than expected shipments and revenue for the third quarter of 2014, citing capacity was fully-booked in the fourth quarter and that it expected strong demand in the first quarter of 2015. JA Solar noted that around 75% of planned production was already booked for the first quarter. 

JA Solar had previously said that it was targeting to increase capacity of solar cells and modules to 2.8GW each in 2014, up from 2.5GW and 1.8GW respectively from 2013. 

The small solar cell capacity expansion was due to JA Solar’s strategic shift away from being a merchant solar cell producer and become a major module manufacturer. In-house solar cell production capacity was significantly higher than module production capacity in 2013. 

However, management said in an earnings call to discuss third quarter results that solar cell and module capacity was currently at around 3GW for each segment, suggesting that the company had already exceeded previous capacity expansions planned for 2014. 

Therefore the 20% planned expansion in 2015 could potentially take solar cell and module capacity to at least a balanced state of 3.6GW, equating to at least 600MW of new capacity. 

The company had guided total cell and module shipments to be in the range of 850MW to 900MW in the fourth quarter, while raising full-year 2014 shipments guidance to an expected range of 3.1GW to 3.2GW.

Management cautioned however that capacity expansions had not been finalised. 

However, the company noted that it was also considering establishing manufacturing operations outside China, primarily due to the US anti-dumping duties, which have resulted in a significant module shipment reduction (4.7% of shipments compared to 11.2% in Q2 2014) to the US in the third quarter. 

Management noted that in the call that module margins shipping to the US after duties are included were negligible and so had little appetite to sell modules into the US under current market conditions.

JA Solar noted that it was indeed looking at the feasibility of establishing production in North America and South East Asia, though again, cautioned that no decisions had been finalised. This is believed to be due to ongoing negotiations between the US and China on coming to a new agreement on imported modules from China and solar cells used in modules coming from Taiwan. 

Malaysia is regarded as the obvious location for production outside China in the South East Asia region.

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