Key Performance Indicators Now Available to Monitor PV Manufacturing Equipment Trends within PV Equipment Quarterly
San Francisco, Calif., December 2, 2010—In Q3’10 (ending 30 September), the PV Book-to-Bill ratio fell after an eight-quarter high during Q2’10, to a three-month average of 1.16, according to the PV book-to-bill analysis featured in the new Solarbuzz® PV Equipment Quarterly report. In addition, growth rates for the backlog of solar photovoltaic (PV) manufacturing equipment returned to single-digit percentage levels, similar to trends observed at the end of 2008 following the last phase of strong PV tool ordering activity.
According to Finlay Colville, Senior Analyst at Solarbuzz, “The latest PV Book-to-Bill figures are a direct consequence of PV manufacturing equipment suppliers ramping up deliveries following the strong order backlog accumulated during 1H’10, and these figures were matched by record PV tool revenues reported by several leading PV suppliers during Q3’10.”
Historically, Book-to-Bill ratios have been widely adopted by various technology sectors to assess their overall health. In general, a Book-to-Bill ratio of greater than 1 (or parity) is indicative of a strong market. Conversely, a Book-to-Bill ratio below parity provides signs of an unhealthy environment with softening equipment demand.
A Book-to-Bill ratio compares the total amount of orders received to the total amount of product shipped and billed within a given period. It is the ratio of demand versus supply in the equipment supply chain. If the supply chain receives the same level of new orders as it can deliver, this still represents a healthy scenario, but with scope for growth. If the supply chain has fewer orders than it can deliver, this shows as negative growth. A PV Book-to-Bill ratio of 1.16 means that US$116 worth of orders were received by PV equipment suppliers for every US$100 of product billed for the preceding quarter under review.
Colville added, “Until now, there has been no Book-to-Bill information for the PV industry. Indeed, reporting on the PV equipment supply chain as a whole has received less attention when compared to other aspects of the solar industry. This has provided challenges for equipment suppliers when seeking to benchmark their performance against both industry averages and process tool segments within their served markets.”
Figure 1: Consolidated PV Book-to-Bill at the End of Q3’10
Source: Solarbuzz PV Equipment Quarterly
PV Book-to-Bill Explains Revenue Growth Patterns
During 2010, PV manufacturing equipment revenues will easily exceed the US$10 billion level, with Applied Materials recently becoming the first equipment supplier to pass the US$1 billion threshold for PV specific tools within a trailing twelve month trended period. Several other tool suppliers will also report PV revenues during 2010 in excess of US$500 million.
While c-Si cells will account for 85-90% of PV production during 2010, the breakdown of PV equipment revenues by technology reflects a broader contribution from the c-Si and thin-film segments, indicative of continued investment into established and emerging production types. In fact, the second cycle in thin-film fab investment is forecast to peak during 1H’11, with strong equipment revenues forecast from fabs currently at the build-out phase.
In contrasting to on-going capacity expansions, downstream demand for PV modules during 2011 is likely to be subject to a range of policy driven uncertainties. Therefore, specific checks are urgently needed to monitor the level and timing of the most recently announced expansion plans for 2011, with a more robust means of assessing pending capacity over-supply within the industry among top tier producers.
The PV Book-to-Bill analysis provides a direct measure of equipment ordered by PV producers, existing tool backlogs with suppliers, and tools currently being delivered to PV fabs. With equipment lead times ranging from 3 to 12 months, changes in the PV Book-to-Bill figures provide a direct means to assess whether announced expansion schedules are being enacted.
PV Book-to-Bill Updated Quarterly
Photovoltaic capital equipment spending trends can now be tracked clearly by the PV Book-to-Bill, featured within the Solarbuzz PV Equipment Quarterly report. This analysis provides key performance indicators that track quarterly changes in the order books of the global equipment supply chain. The trends across the various Book-to-Bill metrics capture the overall health of PV manufacturing and offer a means of forecasting the size and timing of announced capacity expansion phases.
The PV Book-to-Bill figures are updated quarterly, and include data relating to the preceding three month period. In addition to releasing consolidated updates each quarter, detailed findings will be featured within forthcoming editions of the Solarbuzz PV Equipment Quarterly report, with the next release due out January 2011. Analysis will also be provided on an ad-hoc basis in support of Solarbuzz PV equipment reporting throughout the year, to better understand key developments and trends impacting strongly on the PV equipment supply chain.
To learn more about the PV Book-to-Bill data or the Solarbuzz PV Equipment Quarterly report, contact us at our nine global locations, email us at contact@solarbuzz.com, or call 1.415.928.9743.
About Solarbuzz
Solarbuzz, part of The NPD Group, is a globally recognized market research business focused on solar energy and photovoltaic industries. Since 2001, Solarbuzz has grown its client-base to include many of the largest global PV manufacturers, major investment banks, equipment manufacturers, materials suppliers, hedge fund companies, and a vast range of other multi-nationals. Solarbuzz offers a wide array of reports, including Marketbuzz®, an annual global PV industry report, and Solarbuzz® Quarterly, which details both historical and forecast data on the global PV supply chain. The company’s research also provides annual downstream PV market reports by region for Europe, Asia Pacific and US markets. In addition, Solarbuzz.com is a recognized and respected online resource within the solar industry. For more information, visit www.solarbuzz.com or follow us on Twitter at @Solarbuzz.
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