Following Suntech Power Holding Co. Ltds announcement last week that subsidiary Wuxi Suntech had entered insolvency and restructuring proceedings, IHS Solar has identified a number of issues, it says, have helped bring the once world leading crystalline photovoltaic module manufacturer to its knees.
Specifically, stated senior PV analyst, Mike Sheppard, Suntechs failure to invest in wafer manufacturing was a big mistake. "By failing to vertically integrate in this fashion, Suntech was caught in a cost squeeze between falling system, module, and cell pricing and steady wafer expensesmaking the company uncompetitive," he explained.
The successful SolarWorld-led petition to impose tariffs on photovoltaic modules coming from China to the U.S. also impacted Suntech, continued IHS Solar. Indeed, it believes Suntech was the hardest hit, due to its number one module supplier ranking in the U.S.
"Suntech worked hard to earn its price premium status. As the first Chinese company to do so in the PV market, it was considered at the same level at top-tier U.S., European and Japanese producers," commented IHS Solar.
These issues were further compounded by the GSF Fund scandal, which hit the headlines on July 30, 2012, after Suntech announced it may have backed 560 million worth of fraudulent bonds, issued in connection with the Global Solar Fund, S.C.A., Sicar (GSF), in 2010; and the recently unveiled internal power struggle, which came to light when founder Zhengrong Shi was ousted as Chairman of the Board.
"The net effect of these two events hurt the company, significantly eroding the price premium earned by the company," stated IHS Solar. "By the time news from internal power struggles and the exit of Dr. Shi Zhengrong, Suntech president and CEO, had come to light, it was too late for a company so laden with debt."
Principal PV analyst Stefan de Haan added that the insolvency announcement signals that the Chinese government and banks may not be willing to support ailing manufacturers at all costs. "A little bloodletting may help soften the trade case in the EU," he said.
"And with a major player folding, China can demonstrate it is not fully supporting these companies anymore. This means that the consolidation in the PV industry will continue, since there are still many hundreds of suppliers and there is still a fundamental overcapacity in the market."
Overall, however, IHS Solar forecasts that 2013 will witness a "turnaround" in the photovoltaic industry.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.