Taiwan Solar industry faces turbulence

Taiwanese solar cell producers enjoyed a great 2013 and 2014, as USA sanctions on Chinese made solar cells forced many of the top Chinese solar panel producers such as Yingli, Jinko, Renesola and others to source solar cells from Taiwan. Another tailwind was the massive growth in the Japanese solar market which was dominated by firms like Sharp, Panasonic and Kyocera. These companies outsourced most of the solar cell production to Taiwan. However, 2015 is turning out to be a bitch for these companies as most of them are reporting falling revenues and losses. The main culprit is the inclusion of Taiwanese production in the USA governments’ new solar import sanction from China. US solar producers like Solarworld pointed out this loophole of Chinese solar panel makers using Taiwanese solar cells. Now it is cheaper for major solar panel makers to directly make in China and ship to USA. This means that the Taiwanese cell producers have almost completely lost out in the world’s third biggest solar market, which should become No.2 in the next couple of years. These companies cannot compete in China, where the costs are ultra-low. They also do not have an end customer presence as they are mostly OEM suppliers to Japanese and Chinese solar panel makers. Some of them such as Gintech and Del Solar have announced plans to build factories in South East Asia to escape the US sanctions. Others are still waiting for the next domino to fall.

Neo Solar Power reported a loss for the 1^st quarter of 2015, while GinTech also reported extremely low revenues of just $26 million in March. Taiwanese cell producers are consolidating and becoming bigger, but they suffer from relatively high costs compared to their mainstream peers and also from a lack of presence in the solar module segment. They are forced to rely on orders from others and do not have a strong distribution or marketing network.  Their plans of building factories in SE Asia will also not prove to be a success, as major players like Jinko and Trina are already building factories in Malaysia and Thailand to ship to the USA. As per Digitimes solar cell producers are also being forced to accept credit based terms from Chinese suppliers, as they are badly losing revenues. Generally cells are supplied on a cash basis but the terms of trade have changed very badly for the Taiwanese players. Neo Solar reported a loss on the gross margin level, which means that cell prices have crashed for these companies.

DigiTimes

Crystalline silicon solar cell maker Neo Solar Power recorded consolidated revenues of NT$4.63 billion (US$147 million), gross margin of -2.15%, net operating loss of NT$423 million, net loss of NT$492 million and net loss per share of NT$0.55 for the first quarter of 2015, according to the company.