Commentary:Global solar market losing energy Nuying Huang,Taipei;Jackie Chang,DIGITIMES[Friday 14 September 2012]Since the second quarter of 2011,the global solar market has been a ship trying to sail in a hurricane.Solar markets in Europe and the US have been building up trade barriers while domestic firms file for bankruptcy.Large-size industry leaders in China have been facing financial woes while oversupply continues to loom.Taiwan-based solar firms have been negatively affected by problems at China-based peers and are also seeing increasing domestic problems.
Big and beautiful Germany-based solar firms
Governments in Europe have been cutting solar incentives causing demand to freeze.In second-quarter 2011,the global solar supply chain went into oversupply and has yet to return to equilibrium.This is despite the weaker solar firms in Europe and the US having declared bankruptcy and exited the market.
Market shuffles often begin with small-size firms.However,the current market downturn has been hitting large-size brands too,including Germany-based Solon,Q-Cells,and Centrotherm.This has come as a surprise,as these firms were once the most influential in the global solar market.
In the past year,several Germany-based solar firms that filed for bankruptcy have been bought out by peers.Solon was acquired by Microsol,while Sunways was acquired by China-based LDK.Also,Scheuten Solar was acquired by China-based Aiko Solar.
China's big problems
China-based solar firms have been accused of gaining advantages over competitors from other countries by exploiting heavy government subsidies.The subsidies allow the firms to slash prices lower than any competitors.Hence,when applying for bankruptcy protection,many international firms also filed complaints against China-based firms.However,China-based firms have also been suffering in the current market downturn.
Rumors about the financial problems faced by two of the largest solar firms in China,LDK and Suntech,have been circulating like wildfire in 2012.Both firms have high debt-to-asset ratios.In addition,reports about the Jiangxi provincial government helping LDK on numerous occasions to prevent the firm from failing are also circulating in China.Nevertheless,the provincial government has indicated that it has no intentions of paying LDK's debts.However,the provincial government also indicated that it will not allow the firm to fall because if that happens,hundreds of related enterprises within the province will be negatively affected.
Another China-based solar giant,Suntech,has been facing even more troubles than LDK.In addition to a high debt-to-asset ratio,one of its invested companies,GSF Capital,has been providing Suntech with fake German bonds as collateral related to security interest.
In addition,GSF Capital was charged by courts in Italy for illegally constructing solar PV system installations to obtain subsidies at the end of August 2012.Suntech currently holds 80%of GSF Capital's shares.Market observers have been questioning Suntech's management and decision-making skills due to these incidents.
TSMC loves me,TSMC loves me not
Taiwan's solar supply chain has not been immune to the turbulence in the global market.Nevertheless,the most recent shock came from within the country.At a press conference in August,Morris Chang,TSMC chairman and CEO,revealed plans to switch investments to Motech from strategic to financial.This has been seen by the market as a sign that TSMC plans to releases its Motech shares and give up on the market of silicon-based solar products.
However,Motech chairman,Simon Tsuo,responded to the news saying that it was understandable that TSMC considered releasing Motech shares after its three-year lockup period and the firm would not be affected.
Despite the fact that TSMC has plans to make changes in its Motech investments,it is unlikely the firm will quit the solar market.TSMC Solar,a CIGS thin-film solar product maker and subsidiary of TSMC,has been viewed by South Korea-based competitors as a strong newcomer.
The Great Walls of EU and US
Trade wars between the US,EU,India,and China have begun.After investigations by the US and India,the EU announced on September 6,2012,that it would start an anti-dumping investigation against China-based solar firms.This time,unlike the investigation conducted by the US,the EU investigation will cover solar products such as wafers,cells,and modules.China began its own anti-dumping investigation against US-and South Korea-based polysilicon firms on July 20,2012 in what has been seen a retaliatory measure.
The US and Europe account for 10%and 70%of the global solar market,respectively.Therefore,the EU's decision to investigate China-based solar firms may push the already falling supply chain into further misery.
