SMA Solar Downfall

It has been a sad downhill story for the leading PV inverter maker SMA Solar. The company has not managed the changed dynamics of the PV inverter industry where the locus has shifted to China and Japan from Europe. The company had the largest marketshare with 40% in 2010 and made huge profits on a 25% plus EBIT margin. The company’s product used to sell at substantial premiums as there were no big Asian competitors. But now Chinese companies have entered the industry in a big way and have substantially lowered the prices of solar inverters. Solar inverters now can be bought at 6-12c/watt, from the 30c/watt commanded by SMA Solar just 3 years ago.

Read on GWI Which Solar Inverters to buy – Best Inverter Buys in 2013.

The company has seen a massive erosion in its marketshare with shipments declining sharply to just 4 GW from 5.9 GW a year earlier. This means that the company’s marketshare has halved to just 20%. The company is also forecasting a 10% net margin loss on sales of 1 billion euros for the whole of 2013. I don’t think SMA Solar will be a big force ever again in the solar inverter market despite starting new products. The company does not have a strong footing in the main solar growth markets such as China. The company’s home markets continue to decline. SMA Solar is facing pressures on all fronts.

Its margins, revenues and shipments are all going down and I don’t think that the company has a strategy to reverse the decline. The solar industry will be dominated by low cost large volume players. Solar panels have already gone that way, with smaller module makers either going bankrupt or seeing their marketshare go down every year. Solar inverter market is also going to follow a similar pattern. Though some western players such as Sunpower have flourished, most large solar panel producers such as Solarworld etc. are buried by the Chinese competition. SMA Solar faces a tough road in surviving.

Also read on GWI Solar Inverter Market Sees Huge Price Pressure even as the Module Market Stabilizes.