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Solar wafer supply expected to fall short in 1H16

Posted: 04 Nov 2015 ?? ?Print Version ?Bookmark and Share

Keywords:IHS? solar? wafer? supply shortage? module?

IHS Inc. has given a warning for a potential solar wafer supply shortage across the entire supply chain in 1H16 as a result of the rapid growth in solar installations in 2015 and forecasts for another record year for installations in 2016. This concern comes amid recent announcements of large capacity expansions in diverse geographical locations from various solar module suppliers.

According to the market research firm, there is increasing likelihood of a potential shortage of tariff-free solar cells in the U.S., and several cell and wafer producers are warning of a potential wafer supply bottleneck in the coming months. In addition, increasing demand for high efficiency solar modules from key downstream markets has led to intensive demand for high efficiency wafers.

IHS stated that the current trade case's barriers to importing silicon to China could also aggravate the shortage for high efficiency wafers in 2016. The wafer industry's capacity expansions plans will not keep pace with the IHS forecast for demand growth in 2015 and 2016. Additionally, most tier-1 module and wafer suppliers have limited product availability, until 2Q16, partly due to high demand from installations in China.

In an environment of declining polysilicon prices, the average selling price (ASP) for multi-crystalline wafers has been gradually rising since June, which is improving wafer manufacturers' profit margins, continued IHS.

IHS analysis

Global installations are forecast to increase by 33 per cent this year, to reach from 58.7GW. Growth will slow to 12 per cent in 2016, with global solar PV demand reaching 65.5GW. The increase in demand first affected module manufacturers, but it has progressively trickled upstream to cells and wafer producers; in [3Q15], this increase in demand finally reached polysilicon producers.

Compared to the overall module industry, capacity expansions in the wafer industry are far more capital intensive, while margins for wafer manufacturers are much smaller than for most module manufacturers. This is one of the reasons wafer capacity expansion plans have been much more conservative than new module capacity announcements. A second reason is that many large vertically integrated manufacturers have opted to differentiate their capacities for various products now, rather than having matched capacities for every node in their supply chain, as in previous years. Many of these manufacturers have increased their in-house module capacity, while keeping a significantly lower wafer capacity. They are instead opting to purchase wafers from third-party companies, to reduce their capital expenditures and allow greater flexibility in their manufacturing capacity, in reaction to the fast-moving dynamics of the solar market.

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