A broad range of PV equipment suppliers are expected to have reported record revenues for 2011, after a year of continued capacity expansions. However, this situation will be contrasted by significant cut-back in capital expenditure in 2012 as the PV industry struggles with overcapacity and falling prices, according to the latest NPD Solarbuzz PV Equipment Quarterly report.
With a significant focus on capacity expansions in China and Taiwan, NPD Solarbuzz noted that Asia-based equipment suppliers benefited greatly, often at the expense of Western-based firms with a long-standing history within the industry.
“The euphoria of announcing record revenues for 2011 is countered by the realization that much of the tooling shipped last year was stimulated by highly ambitious capacity expansion plans that were not underpinned by market demand,” noted Finlay Colville, senior analyst at NPD Solarbuzz. “Over-capacity reached chronic proportions across the c-Si value-chain during 2011 and only stronger than anticipated end-market demand in 2012 will mitigate a painful and severe equipment spending downturn.”
The market research firm highlights Japan-based wire-saw producer, Komatsu-NTC and an emerging group of Chinese tool suppliers that included (Fujian) Apollo, 48th Research Institute (CETC-48), (Zhejiang) Jinggong and Jingyuntong (JYT), which saw revenue grow significantly in 2011.
Collectively, the four Chinese companies noted by NPD Solarbuzz, posted a CAGR metric in excess of 200% for PV-specific equipment revenues covering the period from 2008 to 2011.
Many European equipment suppliers with a strong track record within the PV industry (Centrotherm, Meyer Burger, Schmid, RENA, Amtech-Tempress and DEK-Solar) were also forecast to post record PV tool revenues for 2011, while Applied Materials was expected to retain the top spot. Others, such as Centrotherm, Meyer Burger, Schmid, RENA, Amtech-Tempress and DEK-Solar) are also forecast to post record PV tool revenues for 2011.
However, NPD Solarbuzz noted that other European suppliers didn’t benefit from the capital spending as much as others. Notably, the market research firm said that market share eroded around 50% for the likes of Roth & Rau, Manz, ALD-Vacuum and PVA-TePla for 2011, when compared to this grouping’s PV share back in 2008.
NPD Solarbuzz said that China in particular continued to invest in turn-key a-Si lines, which supported revenue streams for Oerlikon and Apollo during the year. The market research firm expected this segment to continue to take bookings, though in lumpy levels.
Equipment spending decline
NPD Solarbuzz noted that it expected a significant fall in capital spending in 2012 and that equipment suppliers were at risk of experiencing year-on-year revenue declines in the 60-70% range, especially those exposed mostly to the c-Si ingot-to-module markets, which suffer greatly from overcapacity.
Technology buy cycle
According to Colville, the PV equipment that was shipped during 2011 is now contributing to a misleading (nameplate) capacity figure, which he believes is at the 50GW level. However, the reaction to overcapacity and falling prices meant that many production lines were shuttered completely or idled as industry average utilization rates are currently below 50%. Some of the equipment shipped last year still awaits tool installation after a market recovery. The result is that annualized, effective (or commercial), ramped capacity is actually closer to 30GW, according to the analyst.
Colville believes that the next round of capital spending, driven by tier 1 and some selected tier 2 players would not begin until sufficient confidence that end-market demand would exceed the 30GW mark.
Currently, Colville sees little for equipment suppliers to be optimistic about regarding 2012 business opportunities, though he noted that changes in the c-Si equipment road map point firmly to an increase in high-efficiency cell variants, with over 75% of capacity added during 2012, capable of producing panels with efficiency gains of 0.5% or more, compared to industry averages through 2011.
Colville told PV-Tech that about 30% of ramped c-Si cell capacity in the first quarter of 2012 was capable of producing cells with an efficiency delta above 0.5%. However, Colville believes that only 10% of the ramped capacity is truly in the high efficiency category, with SunPower and Sanyo still the only two manufacturers that have controllable yields.
“The trend of capex spend through 2012 is a combination of new concepts, line upgrades or line cannibalization where tooling delivered during 2H'11 is not used for new capacity but to enhance existing lines. Cell makers in Taiwan have a more systematic capex spend that is firmly rooted in yield enhancement and increasing the percentage of multicrystalline cells above the 16.8% threshold. This is as much about improved process control at the cell stage as it is with capex spent upstream to improve yield and quality of incoming wafers. Capex spend in 2012 still covers many options – highlighting the fact that roadmaps are simply based on commercial survival and not synergistic technology inflection points,” Colville told PV-Tech.
The NPD Solarbuzz analyst is sceptical of a real technology buy cycle taking hold, though didn’t rule out such a development. He noted that the stronger than expected Q1'12 demand may provide sufficient confidence to reschedule tier 1 expansion plans that were largely on ice, but noted that it was too early to tell whether this would be a technology-buy focus for higher efficiency products or a return to low-risk cost-prioritized products.
“Only a small portion of tier 1 producers' legacy lines has been retired during 2011. Therefore, spending too much time on what will happen to this capacity is of secondary importance,” noted Colville. “The tendency has been to reduce utilization across all lines, rather than taking individual lines offline. This allows a faster ramp when demand picks up for individual companies with strong downstream project sales.”
The market analyst thinks that as a result of the market dynamics, PV equipment suppliers were now searching for technology-buy customers that will both soften the revenue declines during 2012 and provide a clear indication of the process tool types to be prioritized from 2013.
“The strategic planning for PV equipment suppliers is now shifting to 2013 and beyond, with limited prospects for revenue upside in 2012,” added Colville. “Success will be provided to those suppliers that can align product portfolios with equipment process chains that are economic in the new low cost PV manufacturing environment.”