Small but mighty

For such a small PV player, one could easily be forgiven for brushing Taiwan aside when it comes to its influence in the solar industry. Indeed, cumulative installations in 2010 reached just 20.2 megawatts (MW) and in terms of its manufacturing sector, cells comprise the only segment to have made any global waves thus far. But while the industry may be relatively small, its manufacturers know exactly what needs to be done to gain a competitive edge, and how they will achieve their goals. During a CEO forum held on the first day of PV Taiwan, and from interviews conducted with the leading players, pv magazine gained an insight into the industry’s manufacturing strategies for going forward.
Taiwan is the second biggest manufacturer of solar cells in the world, behind China. Next year, according to IEK, both countries will hold an 80 percent share of the market: currently, they are said to represent just over 60 percent (46.4 percent and 14.1 percent, respectively). Of the global manufacturers, three of the top 15 are from Taiwan: Motech, Gintech and Neo Solar. Overall, however, there are more than 40 Taiwanese cell manufacturers. The country went from producing around 1.6 gigawatts (GW) of cells in 2009, to over three GW in 2010. Its expertise in this area is attributed to its strong background in the semiconductor and flat panel display industries.
While its cell sector is booming, the rest of Taiwan’s value chain is not quite as buoyant. Looking at the upstream segment, it wasn’t until the start of this year that the country saw its first dedicated polysilicon company – Taiwan Polysilicon Corporation, established in 2009 – entering mass production. (There are another five companies present in Taiwan, which deal in polysilicon, among other activities.) Meanwhile, in terms of ingots and wafers, there are ten active companies, including Wafer World, AUO Optronics and Sino-American Silicon. The midstream sector, said Karen Lo, Marketing Director for Semi PV Group, is the strongest part of the chain: in addition to the over 40 solar cell companies, she said, there are more than 19 module manufacturers. Finally, downstream, there are over 40 players operating in the area of PV systems and installations, including Top Power, Ever Bright and Motech.
Overall, Europe is still a key market for Taiwanese manufacturers, although India, South East Asia and China are gaining in importance.

Pricing strategies

Manufacturers are notoriously cagey about their cost structures and pricing strategies. And while it is common knowledge that module prices, for instance, have decreased by between 40 and 50 percent in 2011 alone, most companies are, perhaps understandably, unwilling to release specific figures. However, during the CEO Forum at PV Taiwan, OCI’s Executive Vice President Minkyu Lim, said he believed average crystalline silicon-based module prices will come down to around 1.28 U.S. dollars (USD) per watt by the end of the year. Hitting the PV Taiwan show floor, pv magazine found that many of the manufacturers agreed, although there were a few exceptions. While Frank Liang, Regional Director, Global Sales and Marketing for Inventec, for instance, would not disclose the company’s prices, he did say 1.28 USD is “doable”. Neo Solar’s Senior Vice President of Worldwide Sales and Marketing added that their pricing strategy is not to be the cost leader, and that 1.28 USD is a “reasonable prediction” for which the company is ready. He went on to say that Neo Solar’s prices have remained aligned with the industry’s average on a macro-scale. James Chen, Senior Director for Motech’s Marketing and Commercial Division, opened up slightly more, saying that for Motech’s regular modules, prices are sitting at around 1.10 to 1.20 USD, and between 70 and 80 U.S. cents for cells. In terms of the company’s high efficiency modules, which garner a 20 to 25 percent premium, a price of around 1.40 USD is being seen. Win Win Precision Technology proved to be an exception to the rest of the Taiwanese crystalline cell manufacturers. The company, which focuses on manufacturing premium products, is selling its modules at a “substantially higher” price than 1.28 USD. Sascha Rossmann, International Sales Manager, strongly believes that companies like Conergy, which are selling their products for between 80 and 85 U.S. cents are just selling pure material. For Win Win, quality, rather than cost, is key. As such, component provenance is vital.
As is the case industry-wide, thin film prices are below those of crystalline. Danny Huang of Sun Well Solar reported that the company’s modules are selling for just over one USD per watt. However, when it introduces its new line next year, prices are expected to sink to around 65 U.S. cents per watt. Huang added that with the current line this year, it is hoped that prices will be reduced to between 70 and 80 U.S. cents per watt. Vice President of Sunner Solar, Frank O’Young, meanwhile, said his company is selling its seven percent efficient amorphous thin film modules for anything between 90 U.S. cents and 1.20 USD per watt. And, while Auria’s Janice Chen wouldn’t go into specifics, she did say the company’s module prices are sitting at around one USD per watt. RM Soong, Project Manager for AxunTek was also rather evasive when it came to the topic of pricing. He did say though, that the company’s strategy is based on pricing its modules five percent under polycrystalline prices. Therefore, if a polycrystalline module costs one USD per watt, then AxunTek’s modules will be priced five percent under that.
While it was difficult to obtain specific information on Taiwan’s polysilicon industry, the subject of global polysilicon prices was addressed at the CEO Forum. Motech CEO, P.H. Chang believes that the fourth quarter of 2011 will see polysilicon prices nosedive. It will be a “troubling time” for polysilicon makers, he said, because of oversupply and high inventories, which will eventually force production cutbacks.
In a separate interview with pv magazine, TSEC’s Chien pointed out that polysilicon manufacturing methods are not flexible, meaning that cell or module production cutbacks could have a real impact on the market. He added that the first quarter of 2012 will be particularly challenging for polysilicon, with prices falling to between 20 to 35 USD per kilogram (kg). This is also a scenario that Motech’s Chang sees. He said that worldwide polysilicon supply is likely to exceed sluggish demand in the fourth quarter and that prices could be anywhere below 25 to 40 USD per kg. Meanwhile, spot prices may decline to under 35 USD per kg by year end.

Capacity ramp ups

Although the global PV industry is currently suffering from high inventory levels, there are big plans among Taiwan’s manufacturers to ramp up capacity in 2012 and beyond.
Frank Liang, for example, said Inventec is currently running at full capacity – one of the few companies that pv magazine spoke to that is – at 100 MW. By the first quarter of 2012, capacity will be ramped up to 200 MW; this is expected to increase to 300 MW by the third quarter. Furthermore, he said, next year 100 MW of Inventec’s line will be fully automated. Neo Solar, on the other hand, has already ramped up its cell manufacturing capacity from 820 MW to 1.3 GW this year. Andy Shen explained that while the company is not running at full capacity, it is running at a relatively high utilization. Motech, meanwhile, has a 1.5 GW cell line and 100 MW module line. While it did have plans to expand in 2012, these are now “on hold” due to the unstable market conditions. “It’s a difficult time to even see through the next months,” said Motech’s Chen, adding that 2011 has been worse than 2008 for the solar industry. Win Win currently produces between 80 and 85 MW of PV modules annually. This will ramp up to 300 MW by next year, said Sascha Rossmann, even though the company is not currently running at full capacity. To accommodate the expansion, a new facility will be established in Taiwan. TSEC meanwhile, has plans to increase its 320 MW cell capacity to over 500 MW by the end of 2011.
Looking at the thin film manufacturers, Sun Well has a current capacity of 55 MW, which it expects to increase to 65 MW by next year. Sunner Solar also has plans to scale up. Frank O’Young told pv magazine that the company intends to build a second factory, which will increase its current 25 MW capacity to 120 MW. Construction is expected to be completed by the end of 2012, meaning that by 2013, it will begin cell production. In the short-term, the company will double its current capacity to 50 MW within the next six months at its existing facility to meet demand. Sunner has been running at full capacity, 24/7/365 since the third quarter of 2010. Currently, half of its 25 MW production line is dedicated to building integrated PV (BIPV) modules. Auria’s Janice Chen, meanwhile, stated that the company’s current manufacturing capacity is at 60 MW. However, this is expected to be ramped up considerably to 245 MW by 2012, 525 MW by 2013 and over one GW by 2014. Five percent of its business focus is on the BIPV market. CIGS (copper, indium, gallium, selenide) manufacturer AxunTek, on the other hand, has plans to grow its capacity from 35 MW to 100 MW in 2012. It is also building a new facility to accommodate this expansion.
In terms of manufacturing equipment suppliers, there are a few operating in Taiwan, such as Gallant Precision Machining Co. Ltd. However, Taiwanese manufacturing equipment, according to Inventec’s Liang, is very expensive. The equipment for its module line, which is 80 to 85 percent automated, comes from both Germany and Japan; this seems to be the case for many of the country’s solar manufacturers. Motech, for instance, uses a combination of European, Japanese, Chinese and Taiwanese equipment suppliers. Sunner Solar, meanwhile, gets its equipment for its existing line from Japan. In the future, said O’Young, the company will consider using European companies. Auria, on the other hand, plays it safe with German equipment manufacturer Oerlikon, while Win Win uses Schmid’s semi-automated equipment.

Technology war

PV manufacturing, as the industry is well aware, is increasingly moving to Asia, mainly due to price pressure. Of all the Asian countries, China is the clear leader – something that has not escaped the attention of Taiwan’s PV industry leaders. Semi’s Karen Lo explained that China’s PV industry is growing at a faster pace than Taiwan’s, because of its big domestic market and government subsidies, which are present on both a central and local level. Furthermore, she said that the Chinese industry is better vertically integrated and, therefore, has a higher profit margin because it can control supply. However, while the country may be winning the price war, Neo Solar’s Hong declared that a global technology war is just beginning and it is here that Taiwan can prove its prowess. China, he said, can still learn a thing or two from Taiwan, which he believes will emerge an overall technology leader, due to its in-depth semiconductor experience. Hong added that technological expertise in Europe and Japan is impressive, but that they are at a disadvantage due to high manufacturing costs. Christine Young, Chairwoman of the Taiwan Polysilicon Corporation also underlined the importance of technology, and stated that one of the most crucial factors for the solar industry is technological advancement. “Companies that are blindly overbuilding capacity will be penalized,” she said, adding that larger is not always better, and that good technology, strategies and common sense will be rewarded. However, she said that technological advancements are slower than industry price reductions. Therefore, companies must work harder on their technology roadmaps.
In terms of specific technology improvements that can be made, Neo Solar’s Sam Hong spoke at length at the CEO Forum about the need for higher efficiency cells, as did OCI’s Minkyu Lim. “High efficiency cells are in shortage,” Hong told the audience. He believes that there is “strong” demand for such products at the moment, and that only companies with high efficiencies can gain a better market position. Possible reasons for this demand, he said, are attractive feed-in tariffs for PV rooftop applications and an oversupply of low efficiency cells.
Speaking to pv magazine, Inventec is one of the many companies that said it will focus on rolling out high efficiency products. For example, at PV Taiwan, the company showcased its new 400 Watts-peak “High Efficiency PV Module”, which encompasses 96 multi-polycrystalline cells manufactured by the company. A pilot run was completed in July, where an average efficiency of 16.8 percent was reportedly reached. Frank Liang said the company is also working on its new smart module, along with Tigo. Debuting at the tradeshow, discussions are currently said to be underway to roll the product out with customers in the U.S. and Germany. In terms of Neo’s product line, the next offering will be its Perfect 19 – a full square monocrystalline PV cell, with three bus bars. With an efficiency of 19 percent, the company expects to enter into mass production in the next 12 months, after a trial phase.
In particular, Andy Shen believes products like Perfect 19 are suited to the Japanese and German markets, where rooftops are smaller, thus requiring a higher efficiency product. He added that by 2013, of the company’s total capacity, 20 to 30 percent will comprise the company’s high efficiency cells, while the remaining 70 to 80 percent will encompass its cells for the mass market. Motech, meanwhile, is said to be working on a new module prototype, which should be ready for launch in 2012. By using a new casting process, said James Chen, which combines both mono- and poly-crystalline, production costs are lower, while efficiency is between 17 and 18.4 percent. However, he added that the technology still needs to establish a market position before it can begin to be mass produced. Another company aggressively targeting high efficiencies is TSEC. Robin Chien stated that by the end of 2011, the company aims to increase its current 16.8 percent efficient multicrystalline cell to 17 percent. He said they are “close to achieving this” now. Meanwhile, it is hoped that its Mono-Like cells, which have an average efficiency of 17.6 percent will reach 18 percent, while its monocrystalline cells, which have an efficiency of 18.4 percent, will hit 19 percent. Of TSEC’s current 320 MW manufacturing capacity, 20 percent comprises its high efficiency cells.
For thin film manufacturer Sunner Solar, the best way to compete in the industry is to develop unique products. For example, the company is particularly active in the BIPV market – half of its 25 MW production capacity is allocated to BIPV modules – and has launched a number of innovative products, including PV furniture. Its glass desk, at which devices like computers and mobile phones can be charged, was displayed at this year’s Intersolar. Working alongside Taiwanese furniture makers, the company expects to have it market-ready in early 2012.Auria, another thin film manufacturer, which focuses on micromorph thin film and is looking to compete with First Solar, said it expects to hit efficiencies of 11 percent by the end of this year, 12 percent by 2012, and 15 percent by 2015. The advancements will be made, said Janice Chen, via the company’s new partnership with Mitsubishi Heavy Industries. “MHI’s PCVD [plasma chemical vapor deposition] technology will be mixed with Auria’s TCO [transparent conductive oxide],” she explained. In addition, she said the standard module size of 1.1 x 1.3 meters will increase to 1.1 x 1.4 meters. CIGS manufacturer AxunTek commented that in 2012 “or later”, the company will mass produce modules based on CIAS (copper, indium, aluminum and selenide) technology, which is similar to CIGS, but cheaper. At the moment, said RM Soong, the efficiency of the company’s modules is 12 percent. However, it is hoped that this will increase to 13 via the new technology.
On another technology track, Walt Chang from DuPont said during the CEO Forum that a key challenge for the industry is to work on lowering material costs. He explained that the PV industry has a higher material content than other electronic products. Therefore, there is more work to be done. This, he said, is both an opportunity and a challenge. The three key material areas to focus on are: efficiency, lifetime and cost reductions.
Neo Solar’s Sam Hong added that it is vital to keep watching new developments in cells, such as contacts, junction optimization, and the materials above and below the silicon.

Full throttle

As is evident, along the entire manufacturing chain Taiwan’s PV players are working at full throttle, with capacity ramp ups and innovative R&D work afoot. The industry’s aim is to become a world leader, based not only on its competitive cost structures, but also by building on its reputation for experience in the cell sector and its quality products.
Armed with a clear idea of how they need to achieve their goals – technological advancement is most definitely the phrase du jour – the manufacturers are busy implementing progressive business models. For example, Motech’s James Chen, said the most important lesson learned this year is “speed of response”, i.e. that manufacturers have to be quick in terms of stopping and starting production. “You need a forward looking and flexible model, and to be quick,” he said. Conversely for Win Win, the concept of exclusivity and working with authentic partners is crucial. As Rossmann stated, for them it is not about mass production, or cost, but quality and sustainability.
Whatever the business model or strategy, Taiwan has a wealth of experience in the electronics industry to draw upon. The country has long been a leader in the semiconductor sector: if its technological and capacity expansion goals are realized, it will also fast be at the forefront of the global PV industry.