Taiwanese solar cell makers are expected to feel the pinch of sluggish demand this quarter as prices fall below cost amid deep cuts in government subsidies in Europe, a Taipei-based market researcher said in a weekly report.
However, local polysilicon suppliers and solar system installation service providers will be less affected by the industry slump and could remain profitable this quarter, TrendForce Corp (集邦科技) said on Wednesday.
INTO THE RED
Solar cell makers are expected to drift into the red this quarter as they bear the brunt of a sharp decline in demand and prices.
“The second quarter will be a trying period for solar cell companies because of lackluster prospects,” TrendForce said. “It is highly possible that the price will drop further to below US$1 per watt as there are no signs indicating a recovery soon after prices fell to near the cost level of US$1 per watt.”
To minimize price erosion, solar cell manufacturers such as Motech Industries Inc (茂迪), Gintech Energy Corp (昱晶) and Solartech Energy Corp (昇陽光電) have cut output to cope with sagging demand, driving down their factory usage to about 80 percent, which means higher cost per unit because of heavy equipment depreciation, the researcher said.
PRICES PLUNGE
TrendForce said the price of solar cells plunged 5.66 percent to an average of US$1.034 per watt this week from a week ago, with the lowest price hitting US$0.9 per watt. Prices had plunged 2.92 percent the previous week.
Motech, the nation’s biggest solar cell maker, said last week it expected solar prices to slide slightly this quarter from last quarter.
PROFITS DECLINE
The company reported its smallest quarterly profits for the first quarter at NT$680 million, a decline of 53 percent from the NT$1.46 billion profit in the final quarter of last year. Gross margin plummeted to 12.5 percent, the lowest in five quarters, from nearly 20 percent.
Shares of Motech, Gintech and Solartech yesterday dropped 1.4 percent, 2.59 percent and 4.21 percent respectively to NT$105.5, NT$75.2 and NT$63.7.
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