In an effort to further reduce its manufacturing cost structures, Solarfun is planning to spend approximately US$130 million to boost capacity of its wafering and cell production to become more integrated. The company expects to construct additional buildings, facilities and infrastructure, especially for its ingot and wire saw operations in 2011. The capital expenditure is being financed by the recent equity injection from the Hanwha Group, as well as net cash flow from operations and cash in hand.
Solarfun noted that it had already succeeded in reaching its current capacity expansion plans for 2010, which included 360MW in ingot manufacturing capacity, 400MW in wire saw capacity, 500MW of cell capacity and 900MW in module capacity. This represents increases of 100MW in cell capacity and 200MW in module capacity compared to the end of the second quarter of 2010.
However, with higher capital cost and longer equipment lead times, Solarfun does not currently have a balanced integrated manufacturing infrastructure, being ‘top heavy’ with higher module capacity than wafering and cell production.
The plans for 2011 include boosting ingot capacity from 360MW to 510MW and wire saw capacity from 400MW to 572MW. Solar capacity will also be increased from 550MW to 820MW, better matching its module capacity.
Solarfun also noted that it plans to continue to reduce processing costs through enhanced manufacturing efficiencies and other R&D breakthroughs.
“Our goal is to make Solarfun more fully vertically integrated as we seek to lower our manufacturing costs and become the leading low cost producer in the market,” explained Peter Xie, CEO and President of Solarfun. “As our current projections indicate, the expected capital expenditures will be spent on expanding ingot, wafer and cell capacities, which we believe will help improve our cost structure over time.”
Xie noted that the decision to further ramp its manufacturing capacity was to meet expected customer demand in 2011.