Suntech Power Holdings said a surge in second-quarter sales made it the world’s largest solar module producer by revenue.
But it warned of higher silicon wafer costs and said its next generation high-efficiency Pluto cells still struggle with manufacturing difficulties.
The Chinese producer reported quarterly sales Wednesday that rose 95 percent from last year to $625 million. Rival First Solar’s sales for its recent second-quarter were $588 million.
However, the company said silicon wafer prices were largely unchanged in the second quarter, but are showing signs of rising. Suntech could find itself exposed to short-term increases, said CEO Zhengrong Shi. The company indicated it would expand its wafer production capacity. (Suntech has a minority stake in wafer maker Shunda Holdings. Shunda is going through reorganization.)
The news led to warning flags from some analysts. “We believe (Suntech’s) costs will remain above its competitors due to near-term tightness in wafer supply,” cautioned Needham’s Y. Edwin Mok.
Suntech also acknowledged that Pluto production still faces hurdles. The company made progress eliminating some production bottlenecks, Shi said on a conference call. He noted that production increase to 6 megawatts during the quarter from 4 megawatts, and that more manufacturing capacity would shift to Pluto in coming months.
The cells are achieving 19 percent efficient on mono-crystalline wafers and are key to Suntech ability to compete with efficiency leader SunPower.
On the conference all, Suntech also said:
*Its decision earlier this month to kill trial production of amorphous thin-film solar cells was tied to the decline in crystalline silicon module prices over the past couple years and delays in final acceptance testing of the line. The company took a $54.6 million impairment charge for its thin-film production equipment.
*It would accelerate plans to add crystalline silicon module production capacity. The new target is 1.8 gigawatts by the end of the year, up from 1.4 gigawatts at the end of the second quarter. The company also increased its shipment target for 2010, to 1.5 gigawatts from 1.3 gigawatts.
*Non-silicon production costs fell to 52 cents a watt from 56 cents. The company said it is on target to reach 50 cents.
*Average module sales prices were down 4 percent in the second quarter, mostly due to the decline in the value of the Euro. Prices could decline slightly in the third quarter, but should be relatively stable in the second half of the year, the company said.
*The solar market remains solid. German business was strong in the second quarter and should remain so during the second half of the year, despite the July cuts in the nation’s feed-in tariff. Sales in France, Italy and the Benelux countries also should grow in the second half of the year.
*Meanwhile, North American demand showed signs of improvement. Sales in the United States grew 35 percent sequentially in the quarter. Suntech also said it sees potential in Asia, particularly in India. The sun’s intensity is good there and the nation’s power grid is unreliable, says Shi. “The Indian market is a sleeping giant in terms of the potential for long-term solar demand.”
