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17 January 2013 | Anna Reynolds
Falling prices and high operational costs will reduce the number of companies in the solar panel supply chain by 70 per cent this year, according to analysts IHS.
The total number of companies worldwide involved directly in the manufacturing of solar panels is expected to fall to around 150 in 2013, down from 500 in 2012. This compares to about 650 in 2011 and 750 in 2010.
Mike Sheppard, senior photovoltaics analyst with IHS, said: “It would be a major understatement to say that consolidation is occurring in the solar supply chain this year. Most upstream solar supply operations will simply cease to exist, rather than being acquired by other companies. Most of these suppliers actually have already stopped production, and will never restart.”
Those firms at the highest risk of going out of business include integrated suppliers that manufacture polysilicon, ingots, wafers and cells, many of which are based in China. While government subsidies could keep integrated suppliers operating, IHS said the majority will dissolve in 2013.
Second and third-tier suppliers of crystalline silicon, wafers and cells will also struggle and IHS recommended they maintain strong relationships with companies in emerging markets. Further, IHS advised flexible business models with consistent outsourcing. Contract manufacturers require certain levels of business to remain profitable, therefore securing stable relationships with these companies is also critical to survival.
Second-tier module makers, which manufacture components, must also be flexible enough to capitalise on the volatility in high-growth markets, as suppliers to small and medium-sized engineering, procurement and construction companies. According to IHS, module makers have less allegiance to top-tier manufacturers, but over time will favour low-cost producers. This is already the case in India and is becoming a factor in Chile.
But IHS warned the weakness of the solar market means there is no guarantee the supply chain “shake out” will boost the surviving suppliers in 2013.