We at Greenworldivnestor have written many times that SMA Solar is a bad story to invest in, given the major structural changes that have taken place in the solar energy inverter industry. SMA Solar, which still continues to be the largest solar inverter manufacturer in the world despite 5 years of marketshare losses, has produced a 90 million Euro loss in 2013 despite the industry growing. The shipments of solar inverters increased by 12% in 2013 over the last year. However SMA Solar saw its shipments contract by 25% to almost 5 GW, which means that its marketshare has come down to only 15%, down from a peak 40% reached in 2008.

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SMA Solar came to dominate the solar inverter industry, thanks to its booming home market Germany which accounted for more than 50% of the demand during 2007-2011. However, the global solar demand has decisively shifted to Asia in 2013. China is the world’s largest country in terms of solar demand, with more than 10 GW installed in 2013. Germany on the other hand, saw its shipments decline by more than 50% to less than 3.5 GW in 2013. Other European markets also saw a big decline, as most markets are now saturated with solar capacity and the governments have also sharply curtailed solar subsidies.

About SMA Solar

SMA Solar always had a higher pricing structure, compared to other solar inverter companies such as Power-One. This has put the company in problems in highly price sensitive markets of Asia, where cheaper producers are beating the company. SMA Solar tried to solve its Chinese problem by buying a Chinese inverter maker Zerversolar, but that also did not turn out well for the company.

The company’s revenues have also fallen by almost 40% to less than 1 billion euros in 2013 and it may lose its No.1 crown as well. SMA Solar is putting a lot of money into R&D to make new products such as microinverters and integrated storage solutions, but I do not think there remains much hope for the company.

SMA has recently seen its stock rally along with the solar sector, but I think that will be short lived. The company will have to look at a new strategy to survive this market. The company can look into getting into new power electronics segments or even look to sell itself to an electrical giant.