Is The Daqo IPO Back? Chinese Polysilicon Maker Files New Business Plan With SEC

August 20, 2010

Daqo New Energy Corp. postponed an initial public offer in January. Two days ago, it filed new documents with the Securities & Exchange Commission suggesting a $100 million IPO may be back on the table.

The new filing lays out a business plan that is scaled back in one measure and more aggressive in another. It also points out that sales have doubled so far this year – growth that could interest investors.

Daqo is a Chinese manufacturer of polysilicon used by solar companies Yingli Green Energy, Solarfun, Solargiga, China Sunergy and Tianwei New Energy to produce photovoltaic products. It boasts it is one of largest polysilicon companies in China.

Taqo has nonetheless scaled back its expansion plans. In its January filing with the SEC, it projected production capacity of 3.300 metric tones by September 2009.

Its updated filing on Aug. 18 says this same level of production capacity (3,300 metric tones) was in place as of June 2010. Plans now call for an expansion to 7,300 metric tonnes by the end of 2012, instead of the 9.300 metric tonnes projected in January.

At the same time, the company is more aggressively pursuing vertical integration. It plans to begin commercial wafer manufacturing in the first quarter of 2011. Module production already has begun with solar cells it buys from other makers. As of June, module production capacity was 50 megawatts. It will grow to 200 megawatts in the first quarter of 2011.

“We also intend to enter into the cell manufacturing business in the future,” the documents says – a new addition to the business plan.

In its January papers, the company’s goal was to expand into module manufacturing and solar power system integration and installation. It offered few details.

Business so far this year appears solid. The company’s revenue for the first six months of the year doubled to $98 million from $49 million for the same period in 2009. Profits rose more slowly, to $18 million from $14 million. For all of 2009, sales were $111 million and net income was $30 million.

Daqo said it would use the money from an IPO to expand its polysilicon and module businesses and to enter wafer manufacturing. It is not the only Chinese solar company to balk on an IPO this year. Both Trony Solar Holdings and JinkoSolar Holding have back away from selling shares to the public.

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Posted by Mark Boslet

Applied Materials Gets Good News About Its Beleaguered Solar Line

May 6, 2010

Applied Materials’ solar business has been feeling the pressures of late.

The manufacturing equipment supplier appears to be seeing solid sales of machinery to make polysilicon solar cells. Prices of the finished cells have fallen and demand is surging ahead of July cuts in the German feed-in tariffs.

But Applied’s SunFab thin-film gear seems to be flagging. It is high priced, and competitors claim it trails in some key innovations.

The equipment giant received some good news about the troubled business this week and it subsequently suggested the SunFab line is set to capitalize on significant market opportunities.

The product line won a master certification from Underwriters Laboratories, which can streamline a manufacturer’s ability to get its modules into the market. The SunFab equipment produces large panels that measure 5.7 square meters.

In a press release announcing the news, Applied Materials Corporate Vice President Kirk Hasserjian said solar cell production should more than double in two years to 2 GW from 400 MW. The certification is critical to SunFab customers working in this market, he said, suggesting they were poised for expansion.

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Posted by Mark Boslet

Solar Arms Race Heating Up

March 19, 2010

Interest in the solar market is on the rise. But the industry is finding it difficult to know which solar technology will win in the long run: thin film or polysilicon.

Two days ago, manufacturing powerhouse GE placed a big bet on the business, promising to develop a line of low-cost cadmium telluride thin-film cells to rival those of solar leader First Solar.

Polysilicon has the efficiency title but GE wouldn't have chosen thin film without a good reason

Late Thursday, polysilicon maker SunPower fired back. It boasted of record efficiencies in its cells: 20 percent in the market now and 24 percent under development.

The arms race is off to a full sprint. The trade off is greater efficiency versus lower price. As long as polysilicon, or crystalline, cells keeps making efficiency gains, the price advantage of thin film can be kept at bay. But as the price of thin film falls, the pressures rise for crystalline efficiency gains.

SunPower CEO Tom Werner says he sees an increasingly competitive market. But he says he has no increase in shifting to thin film. There are several good reasons. For one, fewer polysilicon cells are required on a rooftop to generate the same amount of power.

SunPower is pushing hard on efficiency. Werner says the first 24-percent cells were made in the fourth quarter, besting the 20 percent efficient cells in production now. The company also has the key $1 a watt manufacturing target in its sights for 2014. Today’s cost is just under $2.

SunPower may have a technology lead over Chinese makers. But they, too, are pushing the efficiency dial. Suntech now produces at 19 percent with improvements under developmet. JA solar in February said 18.7 percent efficiency was in its labs.

Thin-film companies aren’t running scared. The race is on in earnest to produce the least expensive, most efficient cell, says GE. With that in mind and “after having completed an exhaustive survey of the PV landscape, we determined that thin films were the optimum path,” says GE’s Danielle Marfeld.

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Posted by Mark Boslet

GE Targets The Solar Market And Sales Leader First Solar

March 18, 2010

GE shook up the solar market Thursday by announcing plans to develop a line of thin-film solar panels using the cadmium-telluride material that has given First Solar its market lead.

GE said it would rely on cadmuim teluride technology from PrimeStar Solar, in which it hold a majority share

The manufacturing giant said its products would benefit from the cost advantage thin-film has maintained over the traditional polysilicon used by many Chinese makers. Panels are expected in the market by 2011.

The company said it is working with PrimeStar Solar, a cadmium telluride start-up in which it holds a majority ownership.

GE’s return to solar – it at one time produced crystalline silicon cells – appears to have been delayed a year by the global downturn. But its commitment to thin film appeared strong, despite recent industry skepticism that thin film will be able to keep up with polysilicon cells, which continue to make efficiency improvements.

Some polysilicon manufacturers now boast of laboratory cells operating at 19 percent efficiencies and greater compared with the 11 percent or so from thin film.

“After having competed an exhaustive survey of the PV landscape, we determined that thin films were the optimum path for GE,” said the company’s solar R&D leader Danielle Merfeld. The company’s product development will take place in Colorado, New York, China and India.

GE intends to market to utilities rather than consumers.

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Posted by Mark Boslet

More Protectionism In China Could Distort Polysilicon Prices For Solar Cells

January 19, 2010

Polysilicon prices fell in 2009 to one tenth of what they were two years ago as a glut of new capacity came online. They are likely to tumble further.

Producers had just begun to emerge in recent months from the numbing days of the downturn, when sales and profits plunged. Now this recovery is threatened by government policies in China, which are keeping the discipline of a free market from taking hold.

Chinese government makes investments in polysilicon makers

According to Lux Research, the Chinese government stepped in to prop up key polysilicon manufacturers with cash late last year. This should shield them continued price declines and allow them to expand plants if they wish, or keep unneeded ones operating.

Publicly, Chinese officials have warned domestic suppliers they have too much manufacturing capacity. But the recent actions run counter to the warning and appear to make some sort of accommodation unnecessary. The country had the capacity to produce 50,000 tons of polysilicon at the end of 2009, or more than 80 percent of projected worldwide demand for 2010.

Despite the call for companies to scale back production, the government took aggressive steps to put more financial resources in company hands.

In November, Jiangxi International Trust and Investment, an arm of the Xinyu provincial government, bought a 15 percent stake of an LDK Solar plant for $219 million. The same month, GCL Silicon sold a 20 percent stake of the company to the China Investment Corp., a state-sponsored investment house.

The investments come only several months after the country imposed import restrictions to keep local prices from falling too fast.

Clearly the country hopes to manipulate the market to favor its companies, If the world wants a free market in polysilicon – and more realistic prices – its needs to confront government subsidies and protectionism in China.

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Posted by Mark Boslet

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