by 
EL SEGUNDO, CA — While new photovoltaic (PV) installations are expected to rise robustly in 2011, the road to growth will be bumpy, with inventories throughout the solar industry expected to surge in the first quarter because of a temporary dip in demand, according to new IHS iSuppli research.
Stockpiles for materials and products across the PV supply chain are set to spike in the first quarter, as a result of a short-term softening in demand for new solar installations. Days of inventory (DOI) will expand by 22.9 percent for crystalline silicon (c-Si) modules and by 21.4 percent for thin-film (TF) modules.
The industry average DOI for c-Si modules in the first quarter of 2011 will reach 48, up from 37 in the fourth quarter of 2010. DOI for thin-film modules during the same period will reach 41, up from 32.
PV modules will suffer the most pronounced jump in inventories, but solar polysilicon, wafer and cell materials also will see DOI increases.
These developments serve as an early indication of a looming overcapacity situation. However, the inventory spike will be confined to just the initial two to three months of the year, IHS believes.
“A major factor behind the solar inventory spike is the subsidy-driven nature of the PV market,” said Stefan de Haan, senior analyst for PV at IHS. “Feed-in tariffs in many countries decreased on January 1, reducing government incentives to install new systems in early 2011. Furthermore, demand—usually lighter toward the beginning of any year—also is being depressed by unfavorable weather conditions prevailing in key European countries. Combined with a less pronounced year-end rally in 2010 compared to 2009, the slowing in demand has resulted in a pileup of inventory.”
The good news is that IHS believes global solar demand will rebound sharply over the course of 2011, bringing inventory for the entire PV value chain back to relatively low levels. On an annual basis, supplier inventory will increase only slightly this year compared to 2010.
The even better news is that despite these first few difficult months, the majority of manufacturers will be able to limit inventory to levels that won’t force them to cut production. DOI might reach 2009 levels, but a major inventory glut as deleterious as that seen during the first half of 2009 is not likely to recur.
Learn more with IHS iSuppli’s latest report entitled, PV: Strong Market Has Suppliers’ Inventories at Healthy Levels at:
This is very interesting. Do you have details about the possible glass shortage? I take it this glass is made out of something other than the abundant natural resources that are used in low-tech glass.
Oddly, I know a little about the glass used in displays. It is a unique glass that incorporates a lot of materials noy used in typical glass. Additionally, since LCDs are built a lot like semicondcutors, the glass has to withstand some rigorous manufacturing techniques. I believe Corning is the largest supplier of LCD glass–although there may be a supplier in Taiwan that's bigger.
I know less about touch-screen glass, but I'd imagine it's even more specialized. So glass shortages are a very real possibility in the electronics supply chain.
Barbara, I agree with you that the industry may face shortages of glass in near future. The reason behind this is obviously the unforeseen rise in demand of touch-based devices. I believe a lot more players should enter into displays manufacturing to cater to the demand. This may be lucrative area for them. What are some of the other measures that can be taken to meet the demand?
How many manufacturers do you think the market can handle? I'm assuming some companies are releasing tablets in order to get acquired by some big ones, or to merge between them.
Do you think there's any drawback to having too many tablets? (brands)… unless they use the same OS – which would help grow the app universe, but if not, it will come back to bite them.
Hi
Thanks for all these great questions. Since Marc Herman and I jointly collected the info for both text and multimedia slideshow, I want to make sure we're all tapped into the same conversation. The link for his piece is at here.
Like Barbara, I know little about the glass and LCD supplier segment, and am quickly coming up to speed. On the ground here, someone from a semiconductor company mentioned that there were three key suppliers in Taiwain, and another one that's a division of a large well-known Koren manufacturer. Another chip guy, told us they were in contact with 25 thin film and glass suppliers. So, I don't know yet who's who is this area, and which partners are aligned where and how. We'll see if we can find out. Anyone willing to rattle off some names?
One of the biggest issues, it seems, has to do with the incredible amount of fragmentation that's popping up in tablets, a segment growing expontentially. While Apple may dominate the global scale and many other top-tier manufacturers will be playing in that space, there's going to be lots of regional players going after regional customers, with language and other features adopted for specific countries. For sure, in 2011, we'll see lots of companies coming to the party, but it's hard to say what consumers will perefer.
Another problem is the size of the glass. While guys the we talked to here said that manufacturing faciities were able to change lines for the more standard size glass (which I believe for tablets has been 7 inch and 9.7 inch), we'll see lots more custom sizes, like Samsung's 10.1 inch. Like on the chip lines, changing production capabilities isn't always a simple thing
Generally for tablets as well, there's little on standards. Every tablet is a bit different, running on different OS systems, and with different features bundled into the hardware and software. Here's an article I stumbled on today in Australian Business Traveller that tries to make some sense of this mess.
Glass shortages or the film shortgaes or the manufacturing cpapcity constraints will have some affect on the LCD production. But I feel the Tier1 OEM's producing tablets may not hav a big issue. I think many OEM's will actually go in the way of apple considering the huge demand for LCD displays in future because of massive tablet market.
Its a good question if there will be enough displays for all tablets. With the increase in sales of tablets, the need of all the components in their part list would have become an issue, LCD displays must be the most ciritical ones. As long as they have multiple suppliers they are safe.
Demand drops – The possibility of cuts in government incentives in Italy, the Czech Republic and the U.S. has led to more conservative sales target in 2011.
Supply goes up – The pouring capital investments across this supply chain may lead to an oversupply situation in 2011, especially in the module part of the
market. Especially with the Chinese manufacturers such as Suntech, Yingli and Trina Solar dominating the top five solar panel vendors.
It appears that the vendor that will succeed in the next year will have the most flexible supply chain and effective inventory management
I think a good strategy for smaller manufactures would be to capture vertical markets, instead of regional markets. If they target the supply chain, they can create a tablet that will be the best solution for companies in that area.
A few other ideas are EHR's and other medical markets, one for schools, etc.
I think that, first, competing against Apple, Motorola and RIM will be impossible. They need to build a good user base and then, probably, sell the company to one of the big ones.