Despite the downturn of the solar market, China-based solar firms have been continuing expanding capacity with the help of local governments and state-owned enterprises. The total capacity for China-based solar firms will reach around 40GW in 2011, but global demand will only reach 15GW. The market will face serious oversupply.
Many China-based first-tier vertically integrated solar firms such as Suntech, Yingli, GCL-Poly and LDK received large amount of loans from banks in 2010. These firms have been strengthening the distribution channels and have begun taking up system business. Compared with Taiwan-based firms that mostly focus on one segment of the supply chain, the Chinese counterparts have more room to adjust resources and shipments. If demand for solar cells contract, these firms can shift focus to polysilicon or wafer supplies. The diversity of their business allows them to continue increase capacity and market share. Once demand returns, the firms will be ready to lead the industry.
Firms such as GCL-Poly have been setting up solar production facilities around the world in addition to its polysilicon and wafer production. LDK plans to increase capacity for its solar module production to add to its already-existing polysilicon, wafer, and cell production.
The first-tier firms are not the only China-based firms that are expanding capacity. New solar firms backed by China's state-owned enterprises and local governments are disregarding market conditions and continuing with their capacity expansion plans.
According to industry sources, China-based firms are mostly optimistic about the future of the solar market because they believe China's government will provide help to the industry by creating domestic demand.
While Taiwan-based firms lack similar resources and support for capacity expansion, they should focus on improving technology and differentiating the products to maintain market shares.
Article translated by Jackie Chang
