Suntech cuts solar cell capacity to boost utilization rates

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As PV manufacturing capacity continues to exceed demand, Suntech Power Holdings is attempting to better marry the two and in doing so lower costs by optimizing utilizations rates. With recent management shuffles, it’s the turn of its manufacturing operations with a ‘temporary reduction in solar cell capacity to 1.8GW.

Approximately 1,500 workers in Wuxi, China will be affected by the move, though many positions will be relocated within the company, Suntech had said in its first quarter filings in May, 2012 that it had expected to maintain cell and module production capacity at 2.4GW and wafer capacity at 1.6GW in 2012.

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“In this rapidly evolving solar market, it is crucial to evaluate market trends and adapt our business to suit,” commented David King, Suntech's newly appointed CEO. “In light of the preliminary U.S. anti-dumping tariff, the European anti-dumping investigation, and oversupply of solar modules, we have decided to right-size our production capacity and continue to optimize our organization. With a smaller manufacturing base we will be able to lower production cost, increase utilization rates and improve product performance. With these and other initiatives we target to create a sustainable business model and return to positive operating cash flow in 2013.”

Suntech said that it was on track to reduce its operating expenses (excluding non-recurring items) by 20% in 2012. However, Impairments related to the closure of facilities, were being assessed and would be disclosed in its third quarter 2012 earnings report.

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