Technological improvement will be the key to solar firms' survival, according to Simon Tsuo, chairman of Taiwan-based solar cell maker Motech. The industry should have seen oversupply in 2009, but the incentive programs in Germany and Italy pushed back the problem to 2011, said Tsuo, adding the only way to stop the price drops and let firms return to profitability is to decrease supply.
Germany has announced a 15% incentive cut for 2012, and therefore sales in fourth-quarter 2011 are likely to see increases on rush orders. However, these rush orders will not be able to send the firms back on the track to profitability. The solar industry previously anticipated large quantity of demand to show up once product prices drop, but newly-developed markets such as the US, China, South Africa, and Southeast Asia have not grown as fast as expected. Tsuo estimated the market condition will continue to be gloomy in first half of 2012.
Supply is likely to reduce with less competitive firms exiting the market. Tsuo pointed out the technological improvements taken by Japan-based Sanyo and US-based SunPower. If these improvements become successful, the market will enter a new phase.
Tsuo pointed out the major differences between Taiwan- and China-based solar firms. The vertically integrated China-based firms have advantages such as effective cost control and well defined distribution channels. Taiwan-based firms have been mainly focused on producing solar wafers and cells. Also, Taiwan-based firms do not have strong capital support as the China-based peers.
Article translated by Jackie Chang
