Digitimes Research has found that solar module shipments from China's tier-one firms Yingli Solar, Suntech, Hanwha SolarOne and Jinko Solar decreased slightly, while Canadian Solar and Trina Solar maintained shipment growth due to strong demand in the US and Asia markets.

The China-based tier-one solar module makers' rankings by shipment in the fourth quarter changed drastically compared to that of the third quarter. Suntech continued to be number one in shipments while Canadian Solar jumped to second place. Trina ranked third and Yingli dropped to fourth. LDK, Hanwha and Jinko ranked fifth, sixth and seventh respectively.

Total solar module shipments from China-based tier-one solar module makers reached 9.13GW in 2011, a 47% increase compared to 6.2GW in 2010. Suntech topped the 2011 solar module shipment ranking with Yingli following close in second place. From third-eighth place are Trina, Canadian Solar, Hanwha, Jinko, LDK and Renesola.

• Digitimes Research monitors solar module shipments from China-based tier-one firms such as Suntech, Yingli Solar, Trina Solar, LDK, Canadian Solar, Hanwha SolarOne, Jinko Solar and Renesola. The latest findings indicated decreases in shipments from Yingli, Suntech, Hanwha and Jinko Solar in fourth-quarter 2011. Canadian Solar and Trina maintained shipment growth due to strong demand in the US and Asia markets.
• Shipment ranking of China-based tier-one solar module makers in the fourth quarter changed drastically compared to that of the third quarter. Suntech continued to be number one in shipments while Canadian Solar jumped to second place. Trina ranked third and Yingli dropped to fourth. LDK, Hanwha and Jinko ranked fifth, sixth and seventh respectively.
• The total solar module shipments from China-based tier-one solar module makers reached 9.13GW in 2011, a 47% increase from 6.2GW in 2010. Suntech tops the 2011 solar module shipment ranking with Yingli following close in second place. From third to eighth are Trina, Canadian Solar, Hanwha, Jinko, LDK and Renesola.

• Despite uncertainties in Europe's solar market and the anti-dumping and anti-subsidy investigation in the US, China-based solar module makers still hold an optimistic view about end market demand in 2012. The firms are especially optimistic about demand growth in the US and China solar markets. Many solar firms are also starting to make plans for the system sector trying to obtain a piece of China's domestic solar PV market.
• Suntech's 2011 solar module shipments reached 2,087MW. Due to uncertain outlook for the year, the firms believes 2012 growth will be around 0-20% with annual shipments to reach 2,100-2,500MW. Currently, Suntech does not have any plans for expanding its capacity, which totals 2,400MW at present.
• Yingli shipped 1,679MW of solar modules in 2011. The firm believes shipments will reach 2,400-2,500MW in 2012 with annual growth rate of 43-49%. Yingli plans to expand capacity from 1,700MW to 1,850MW in first-half 2012, and to 2,450MW in second half.
• Trina's 2011 shipments were 1,511MW. It predicts 2012 shipments to grow 32-39% to 2,000-2,100MW, with capacity expanded to 2,100MW from 1,900MW in the first quarter.
• Canadian Solar's 2011 shipments reached 1,322MW and predicts 2012 shipments to be around 1,800-2,000MW, a growth of 36-51%. The firm plans to expand capacity from 2,050MW to 2,300MW.
• Hanwha and Jinko are more conservative about 2012 shipments. They predict annual growth of shipments to reach 18%. Both firms don't plan to expand capacity. LDK continues to focus on expanding the solar module businesses and has set the 2012 shipment growth target at 117%, reaching 1,400MW.

• GCL-Poly's polysilicon output in fourth-quarter 2011 was 10,989 tons. In 2011, the total output reached 29,414 tons, which could be enough for making 5GW of solar wafers. GCL-Poly was focusing on lowering production costs of polysilicon in 2011 and managed to push production cost down to US$18.6/KG by year-end, lower than most of its competitors. By having lower production costs, GCL-Poly were able to increase shipments and obtaining more market share in fourth-quarter 2011. Currently, GCL-Poly has polysilicon capacity at 65,000 tons. The firm plans to maintain the current capacity level in 2012.
• LDK's polysilicon plant had an output of 2,200 tons in fourth-quarter 2011. The firm's 2011 total output of polysilicon was 10,307 tons, enough for making about 1.7GW of solar wafers. LDK plans to expand capacity to 20,000 tons in mid-2012.
• Renesola produced 1,089 tons of polysilicon in fourth-quarter 2011. The total 2011 production was 3,386 tons, enough to support 564MW of solar wafers. Renesola plans to expand capacity to 10,000 tons in 2012.

• The prices of solar products continued falling in fourth-quarter 2011. Due to loss of value of inventory, solar firms' gross margins were eroded. In third-quarter 2011, Suntech, Yingli and Trina were able to maintain gross margins above 10%. By fourth-quarter 2011, gross margins of all three firms slipped below 10%. Gross margins of Jinko, LDK, Hanwha and Renesola turned negative.
• The fourth-quarter 2011 gross margins of LDK and Renesola both fell below negative 10%. Renesola reported fourth-quarter 2011 gross margin of negative 23.1%. Judging from the cost structure, non-silicon costs of LDK and Renesola for their solar wafer production in fourth-quarter 2011 were US$0.20-0.21/W. The cost of polysilicon was US$35/KG, equivalent to US$0.21/W, hence the total production costs were US$0.41/W.
• JA Solar experienced negative gross margins in second- and third-quarter 2011. But in fourth-quarter 2011, gross margin flipped to positive 0.5%. The main reason was that solar wafer price fell, lowering the production cost of cells. Solar cell makers were able to obtain solar wafers at an average price of US$0.31/W in fourth-quarter 2011, while non-silicon costs were US$0.18-0.20/W. This means the total production costs of solar cells were US$0.49-0.51/W.
• The price of solar modules fell by 54% from the first quarter to the fourth quarter in 2011. Compared to peers, Canadian Solar managed to lower production costs. The firm signed supply contracts with solar wafer suppliers for US$0.31/W. This helped to push solar module costs down to US$0.76/W, contributing to a growth in the fourth-quarter gross margin from the third quarter. Hanwha had a relatively higher production cost compared to peers. By fourth-quarter 2011, the firm's gross margin dropped to negative 20.1%.

Since second-half 2010, the inventory levels of China-based tier-one solar module firms have been rising continuously. In second-quarter 2010, the value of inventory only amounted to 50% of revenues but the figure jumped to 75% in fourth-quarter 2011. Solar firms resorted to low prices trying to lower inventory levels in third- and fourth-quarter 2011, inventory levels were still high.

• Suntech's customer structure changed a bit in fourth-quarter 2011 as the percentage of shipments to Europe fell slightly while shipments to the US increased. US demand was quite strong in the third and fourth quarter as customers rushed to apply for project licenses before the termination of 30% cash grant at end of 2011. Suntech predicts demand in the US solar market to grow continuously. The firm believes 2012 shipments to the US solar market to reach beyond 3GW.
• Suntech has entered the system developing segment. The firm acquired US-based system firm El Solutions and changed the company name to Suntech Energy Solutions to develop rooftop solar PV systems in the US. Currently, Suntech has a 50MW solar module plant in Arizona to meet local demand.
• Germany remained an important European market in 2011. Installation demand in fourth-quarter 2011 increased due to expected subsidy cuts in the beginning of 2012. Suntech noted that after the Germany government announced further subsidy cuts on March 2012, demand in Germany cooled down significantly. The firm believes solar PV system installations to reach only 2.5-3.5GW in Germany in 2012. Solar demand in Italy is likely to fall significantly, and the government plans to make cuts to subsidies in 2012. Suntech holds optimistic view about solar markets in the US, China, Japan, and India.

• The percentage of shipments to China's domestic market increased significantly in second-half 2011, according to Yingli. In third-quarter 2011, shipments to China accounted for 41% of total shipments. The figure dropped to 31% in the fourth quarter. China has become one of the most important markets for China-based firms. Yingli has been bidding for domestic projects using low prices. In the beginning of 2012, Yingli obtained Ningxia's 30MW solar PV system project by quoting solar modules as low as CNY5.18/W (EUR0.63/W). Yingli predicts revenues from China will increase to 35% of total revenues in 2012.
• Yingli's reliance on the solar market in Germany has been decreasing. In 2010, 59% of Yingli's total annual revenues came from Germany's solar market. By 2011, the figure had dropped to 47%. Due to incentive cuts in Germany, Yingli believes 2012 shipments to the country will be around 3-4GW. Revenues from Germany's solar market will decrease to 25% in 2012, said Yingli. The firm began cooperating with IBC Solar, a Europe-based systems provider, at the start of 2012 by signing a supply contract of 200MW. Revenues from other European markets are likely to account for 15% of total revenues in 2012, according to Yingli.
• Yingli's presence in the US solar market has been growing. Yingli believes demand from the US market will grow healthily and predicts installations to reach 2.5-3.5GW in 2012. Despite the anti-dumping and anti-subsidy investigation taken up by the US government against China-based solar firms, Yingli continues to be optimistic about the US solar market. Revenues from the US solar market in 2012 are likely to reach 12-15% of total revenues, said Yingli.

Trina's shipments to China and the US showed continuous growth from the third to fourth quarter 2011. The percentage of revenues from the US surpassed the percentage of revenues from Germany. Trina plans to focus on the US and China solar markets as they have great potential for growth. The firm is also optimistic about the growth of demand in India, Africa, the Middle East and Brazil and have been working to build up distribution channels in these markets.

Hanwha saw shipments to Germany fall in fourth-quarter 2011, with the country's share shipments dropping to 23% from 45% in the third quarter. Shipments to Italy and other European regions showed declines as well. However, shipments to the US increased to a 33% share from 13% in third-quarter 2011. In addition, shipments to China and India have been growing continuously. Hanwha's shipments to Japan and South Korea have been steady.

• GCL-Poly managed to lower production cost of polysilicon to US$19.3/kg in fourth-quarter 2011. The target in 2012, according to GCL-Poly, is to lower costs below US$18/kg. Renesola hopes to reduce the cost to US$24/kg from US$30/kg in fourth-quarter 2011. Daqo New Energy reported production cost of polysilicon was US$30/kg at end of 2011 and aims to lower it below US$30/kg in 2012. In 2013, the firm hopes polysilicon production cost will drop to US$25/kg.
• GCL-Poly had an average selling price (ASP) of polysilicon around US$34.26/kg in fourth-quarter 2011, a 22% decrease on quarter. The firm believes the price of polysilicon will continue to drop, reaching US$26/kg by end of 2012.

• GCL-Poly had non-silicon production cost of solar wafers at US$0.15/W in fourth-quarter 2011, a drop of US$0.02 compared to the third-quarter. In the same period of time, Renesola reported non-silicon cost of US$0.20/W, a slight drop of US$0.03 on quarter. When the cost of polysilicon materials is taken into consideration, GCL-Poly had the lowest overall production cost of solar wafer at US$0.27/W, and Renesola's came to US$0.41/W.
• The price of solar wafers dropped 65% in 2011. In the first quarter, the price was around US$0.90/W, and dropped to US$0.66/W in the second quarter. By third-quarter 2011, the price had fallen to US$0.48/W. In the fourth quarter, price reached US$0.31/W, lower than the production costs of most firms. Solar firms predict that by end of 2012, the price of solar wafers is likely to be around US$0.28-0.30/W. But according to Digitimes Research statistics, the price of 156 multi in early March 2012 was US$1.19/unit, which means the price was about US$0.30/W for a 156 multi solar wafer of four watts. Digitimes Research believes the price of polysilicon solar wafers will fall below industry expectations by end of 2012.
• GCL-Poly targets non-silicon costs at US$0.12/W by end of 2012. If production costs of polysilicon can fall below US$18/kg by end of 2012, the total production costs of solar wafers will be able to reach US$0.23/W. Renesola targets non-silicon costs below US$0.15/W. If costs of polysilicon materials drops to US$24/kg, the total production costs of solar wafer can fall below US$0.29/W.

• The lowest non-silicon cost of production covering solar wafers to modules for vertically integrated firms in China in fourth-quarter 2011 were US$0.64/W due to price drops of peripheral materials such as ethylene vinyl acetate (EVA), silver conductive pastes and glass. In the fourth quarter, the prices of EVA and glass dropped by 18% while price of silver conductive pastes dropped by 5%. The price of aluminum pastes also dropped 14%. The production costs of each segment in the fourth quarter were comparable to that of the third quarter. In fourth-quarter 2011, production costs of solar wafers were US$0.18-0.20/W, solar cells were US$0.17-0.19/W and solar modules were US$0.26-0.29/W.
• For 2012, China-based vertically integrated solar firms hope to lower total production costs from solar wafers to modules to US$0.57-0.65/W. Some firms hope that through research and development of new products they can achieve market differentiation, increase conversion efficiency and lower production costs. Some firms hope to re-tune older production lines to lower costs and increase conversion efficiencies.

• The non-silicon production costs of China-based vertically integrated solar firms have been declining continuously. The non-silicon production costs of Trina, Jinko and Yingli have been pushed below US$0.64/W. The costs of materials have been falling due to reduced polysilicon prices. Many solar firms have been successful in re-negotiating long-term supply contract prices with polysilicon providers. Hence the average cost of polysilicon materials in the fourth quarter has been lowered to US$0.30/W.
• In fourth-quarter 2011, the non-silicon production cost of Yingli were US$0.64/W, down by US$0.02 compared to US$0.66/W in the third quarter. Yingli had silicon material cost of US$0.40/W in fourth-quarter 2011. Deducting impacts of loss of value of inventory, the silicon material cost of Yingli was only US$0.33/W. Although Yingli successfully reached its annual target of lowering non-silicon cost to US$0.64/W, the loss of value of inventory caused the firm to list US$33.6 million in non-cash losses. Gross margin also dropped to 3%. Yingli plans to lower non-silicon costs to US$0.61-0.62/W in first-half 2012.
• The non-silicon production cost of Trina in fourth-quarter 2011 was US$0.64/W, down by US$0.01 compared to US$0.65/W in the previous quarter. In 2012, the firm hopes to increase conversion efficiency of solar modules and lower non-silicon cost to US$0.60/W. In fourth-quarter 2011, Trina was able to lower silicon material cost from US$0.37/W in the third quarter to US$0.31/W due to successful re-negotiations of contract prices with material suppliers.
• In third-quarter 2011, the non-silicon cost of Jinko was US$0.68/W. By the fourth quarter, the figure decreased to US$0.64/W, a drop of US$0.04. The firm targets non-silicon costs at US$0.57-0.58/W by end of 2012. As for polysilicon, Jinko has many short-term supply contracts. The main suppliers are OCI and Wacker. In fourth-quarter 2011, the firm was able to obtain polysilicon at US$0.27/W. In first-quarter 2012, the price of polysilicon was around US$20-28/kg.
• Suntech had non-silicon cost of US$0.74/W in fourth-quarter 2011. Compared to Trina, Yingli and Jinko, Suntech had a non-silicon cost about 15.6% higher in the fourth quarter. To beef up its competitiveness, Suntech has been devoting to increasing conversion efficiency to differentiate itself from others. The firm also has modified production lines, reevaluated materials, and renegotiated price of materials to lower costs. The target is to lower non-silicon production cost to US$0.65/W by end of 2012, according to Suntech.