Updated: PV inverter manufacturer Advanced Energy Industries (AE) has decided after more than a six month review to finally exit the sector and focus on its semiconductor business.
AE said that discussions with unidentified third parties in respect to a potential sale of the entire solar operations, which included AE Solar Energy Inc., AEI Power GmbH and other subsidiaries, were deemed insufficient in terms of returns for shareholders, customers, employees and partners.
Yuval Wasserman, President and CEO of Advanced Energy said, "Following on the heels of a strong 2014 and first quarter 2015 in Precision Power that reinforced the strength of our business model, and after an extensive strategic process over the last six months, we concluded that focusing solely on our Precision Power business, and exiting the Solar Inverter business aligns with our long-term goal of maximizing value for our shareholders.”
Due the complete winding down of its PV inverter operations, AE said that expected to record a pre-tax charge of approximately US$260 million to US$290 million.
Around US$150 million of charges are being attributed to impairment of goodwill and intangibles. AE also noted that around US$45 million to US$75 million was being charged to the write down of inventory, fixed and other assets, while US$15 million would be allocated in relation to employee termination cost.
A further US$10 million would be attributed to tax valuation allowances and the remaining US$40 million for other unspecified costs to exit the business.
Cash costs for severance and other expenses were expected to range from US$30 million to US$45 million of which US$20 million to US$30 million would be incurred in 2015 and further small amounts in subsequent years, according to the company.
The company did not disclose how many employees would be impacted by the closure of its PV inverter operations.
According to market research firm IHS, AE had been the 11th largest inverter supplier globally and the fifth largest supplier in the US at the end of 2014. However, in the earlier period of US PV market growth, AE had been the leading supplier in around 2010.
Overall the PV inverter market has been highly competitive for several years, with low barrier to entry and large supplier base.
IHS said that AE had dropped outside of the top ten rankings in 2014, following market share loss in three-phase high power (>99kW) inverter segment in its domestic market, which also experienced major ASP declines.
Despite acquiring German PV inverter firm RefuSol in 2013, demand for inverters has quickly shifted from Europe, notably Germany to Asia, compounding AE’s market challenges, noted IHS.