<solar...continued pressure on gross profit margin>
Driving margins down for cell/module makers:
1. industry overcapacity
2. falling ASPs
margins up from:
1. falling poly prices (which will probably drop to 25$/kg sometime in 2012; there is zero chance poly prices stay above $50)
2. demand elasticity, which is creating new demand in the U.S., China, elsewhere
3. continuing technology development, which increases efficiency and lowers manufacturing costs
4. capacity being taken out, as the weak companies die
In addition, if sales go up enough, profits can go up, even if margins decline. 2011 will be another record year, for MW of solar installed globally.
Overall, it's hard to say whether gross margins go up or down from here. Guidance has been sparse and mixed, giving no clear picture. I'm fairly certain the huge declines seen QoQ in 1Q11 and 2Q11, won't be repeated in 3Q11. I'm also fairly certain, we won't see any huge improvement in margins either, till more capacity is taken out. Margins will be modestly up or down in 3Q11.
I'm not sure why he makes a distinction between cell and module makers. All the big cell-makers are vertically integrated, and do modules too. And, in another year or two, they all plan to be making their own poly and wafers.
The article "paints with a broad brush", and makes little distinction between individual companies. That's typical, of the superficial business press: when a sector is out of favor, everything is hated. So, for instance, FSLR had gross margins of +37% in 2Q11, while JASO's were -3%. That's a big range of results. |
