Suntech stops thin-film production: 2Q revenue US$620 million plus

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The increasingly cost competitiveness of crystalline silicon technology has seen another thin-film victim, this time in the form of Suntech. Although only a small part of the leading China-based c-Si module manufacturer’s product armoury, its amorphous silicon thin-film solar module line has ceased production.

Suntech is currently restructuring its Shanghai facility to focus on the manufacture of crystalline silicon solar cells at a time when the company is at full capacity and sold-out in the first-half of the year. Suntech was a customer of Applied Materials ‘SunFab’ turnkey technology and had installed a 50MW line in 2009. Applied Materials had recently announced it would be stop selling the SunFab technology to new customers and reallocated staff and resources to c-Si technology.

“While the thin-film and Shunda related charges will significantly impact our second quarter financial results, they have no bearing on our core manufacturing operations which are performing very well,” remarked Dr. Zhengrong Shi, Suntech’s chairman and CEO. “Going forward, we will continue to focus on our primary mission of supplying the most reliable and high performance solar panels in the industry.”

Suntech said that it expected to incur a non-cash impairment charge of approximately US$50 million to US$55 million in the second quarter of 2010 in relation to the thin-film line closure.

The company also said that due to debt obligations at solar wafer producer Shunda, which it has a stake in the company and a 7GW wafer supply deal is currently undergoing significant reorganization and that it would incur non-cash charges of US$106 million to US$126 million in the second quarter of 2010. This is related to its investment and prepayments to Shunda, the company said.

On financial results, Suntech said that it expects total net revenues for the second quarter of 2010 to be in the range of US$620 million to US$630 million. Gross margin is expected to be in the range of 17.5% to 18.5%.

“Strong top line results for the second quarter reflect extremely robust global demand for solar. Customers in Europe, Asia, the Middle East and the Americas are increasingly recognizing the benefits of adopting solar and are choosing Suntech as a key partner. Our expected operating results for the second quarter reflect our competitive advantages in these markets,” noted Shi.

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