PV Equipment Spending to Fall by Nearly Half in 2012

Sharp Declines in PV Equipment Bookings to Coincide with Second-Tier Cell Manufacturer Shakeout

San Francisco, Calif., July 11, 2011—PV equipment spending for c-Si ingot-to-module and thin-film panels is forecast to decline sharply in 2012 to US$7.6 billion, down 47% Y/Y from a record level of US$14.2 billion in 2011, according to the latest Solarbuzz® PV Equipment Quarterly report. This decline in equipment spending will impact 2H’11 PV equipment revenues and also result in lower corporate guidance for 2012.

The collapse in equipment spending—coming immediately after Y/Y revenue growth rates of 84% in 2010 and 33% in 2011—is a consequence of ambitious c-Si cell/module and thin-film capacity expansions committed during 2010 and 1H’11 by tier 2 and tier 3 PV manufacturers. Coupled with market oversupply and strong inventory build through 2H’11, this capacity-demand imbalance will usher in a significant cell manufacturer shakeout phase during 2012 to 2014.

Equipment spending for Q2’11 reached US$3.6 billion, declining 3% Q/Q. This represents the first negative growth rate for PV equipment spending since Q2’09, indicative of an inflection-point within the current PV capital equipment spending cycle. The PV book-to-bill ratio also dipped below parity in Q2’11, continuing its sequential Q/Q downward trend from a high of 1.74 posted back in Q2’10, as new order intake reflected the slowdown in capacity planned for 2012.

According to Finlay Colville, Senior Analyst at Solarbuzz, “Strong double-digit bookings and revenue growth through 2010 created a misleading picture for PV equipment suppliers. This was caused in part by aggressive expansion plans of second-tier c-Si manufacturers, and by the quantity of new thin-film fabs that were financed through the recent thin-film investment cycle. An artificial peak in equipment spending was created during 2010 and 2011, providing a short-term pull on equipment that was out-of-sync with the long-term requirements of the industry.”

Equipment suppliers to the c-Si cell/module segment will be the hardest hit, with Q/Q revenue declines of 21%, 12% and 37% forecast from Q4’11 to Q2’12. Thin-film spending declines will follow a similar downward trend, as the second thin-film investment phase draws to a close during 2H’11. Only c-Si equipment suppliers with an established upstream product portfolio and strong market shares (e.g. GT Solar, Meyer Burger, Applied Materials, and Jinggong) have been sheltered from the drop-off in equipment bookings during 1H’11.

Figure 1: PV Equipment Spending Forecast Scenarios (US$ million)

Source: Solarbuzz PV Equipment Quarterly

Cell Manufacturer Shakeout Prioritizes Tier 1 Expansions and Upgrade Tool Spending

Expansions across all tier categories will provide 51 GW and 66 GW of annualized capacity during 2011 and 2012, accumulated from over 300 manufacturers. However, by filtering out the manufacturing capacity that is both cost-competitive and market-leading, the true significance of these capacity levels becomes apparent. Tier 1 cell manufacturers will account for 24 GW and 34 GW of capacity in 2011 and 2012, more than sufficient to meet global demand over this time period.

The cell manufacturer shakeout is a key factor driving the scale of the revenue reset and the phasing of equipment spending during the 2012-2015 period. Equipment spending from tier 2 and tier 3 PV manufacturers is forecast to decline 60% Y/Y in 2012. By 2015, tier 1 companies will account for more than 70% of all PV equipment spending.

“Tool suppliers will increasingly focus on securing preferred-supplier status with tier 1 manufacturers,” added Colville. “Additionally, competition will intensify ahead of the next spending upturn as suppliers from adjacent market segments (e.g. semiconductor and display) exploit the opportunity to enter the PV equipment supply-chain.”

The Solarbuzz PV Equipment Quarterly report enables PV equipment suppliers to navigate these challenges by identifying target customers or competitors, equipment revenues on offer (down to the key process tool level), and the precise timing of each PV manufacturer’s fab expansions by quarter to 2015.

The Solarbuzz PV Equipment Quarterly features a comprehensive capacity and production database, incorporating Solarbuzz’s proprietary industry knowledge across over 300 c-Si cell and thin-film panel producers, and a PowerPoint report with extensive analysis on technology and equipment spending trends. All data and analysis is updated on a quarterly basis and includes expansion and spending activity from the immediate quarter closed for over 1100 capacity expansion phases to 2015. The performance of leading PV equipment suppliers is analyzed, including PV-specific process tool revenues, bookings, and backlogs.

For more information or to order the Solarbuzz PV Equipment Quarterly, contact us at one of our seven global locations, email us at contact@solarbuzz.com, or call Charles Camaroto at 1.516.625.2452 for more information.

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.

About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,800 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, contact us or visit www.npd.com and www.npdgroupblog.com. Follow us on Twitter at @npdtech and @npdgroup.

Solarbuzz and Marketbuzz are registered trademarks of The NPD Group.

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