The solar market has become a two track market for solar manufacturers. Some producers are doing extremely well growing both revenues and margins, while others are struggling to survive. Polysilicon sub-segment is seeing this trend in the extreme, as only 10 large poly producers are making large profits while others are going bankrupt. The reason is that only players who are able to make large capital investments and who have experience in successfully running low cost operations are able to survive. It has become almost impossible for the new entrants to survive given that the margin of safety is quite low. So even as Wacker, Hemlock, OCI are making large profits with gross margins of 20-30%, many other producers such as LDK still have their factories shut down.
Most of the small producers have a cost structure which is quite high at $20-30/kg, when the prices are $20-22/kg and the big producers have a cost of just $10-15/kg and are continuously reducing it further. Some are aiming to reach the single digit levels soon. So while the big guys are making high margins and profits, the small fishes are getting killed. This is also happening in the solar cell and panel segment, but on a lesser scale as many small producers are still surviving. The capex requirement is low in the solar panel industry as compared to the wafer to panel segments. Also the gestation period is much smaller, which means the interest costs are much lower. It is also not possible to create economically viable units on a small scale.
The latest failure in the polysilicon industry is from Taiwan. The Taiwanese solar industry has been trying to diversify its overdependence on the cell part of the supply chain for a long time. The country wanted to start producing polysilicon, as it imports huge volumes from the West. However, its first venture has sunk as the company failed to repay its debt and has been sent to the bankruptcy court
Google+Taiwan Polysilicon Corp has filed for corporate restructuring after a court ruled that it had failed to fulfil its obligations on NT$940 million (US$30.6 million) bonds. According to Wu, the company has outstanding payments relating to a note of NT$330 million (US$10.7 million) from Ta Chong Bank, a note of NT$300 million (US$9.8 million) from Shin Kong Commercial Bank and another of NT$310 million (US$10.1 million) from state-run Mega International Commercial Bank.
