Research firm HIS expects the number of companies in the solar supply chain to plummet by 70 percent

January 10, 2013 // By Julien Happich
Amid rapidly falling prices, mounting losses and massive operational costs, the upstream solar photovoltaic (PV) supply chain is undergoing major consolidation, with the number of companies participating in the market expected to plunge by 70 percent this year.

Worldwide, the total number of companies participating directly in the manufacturing of PV solar panels, from polysilicon manufacturing through module assembly, is set to fall to approximately 150 in 2013, down from about 500 in 2012, according to the IHS Solar service at information and analytics provider IHS. This compares to about 650 in 2011 and 750 in 2010, as presented in the figure attached.

“It would be a major understatement to say that consolidation is occurring in the PV supply chain this year,” said Mike Sheppard, senior photovoltaics analyst with IHS. “Most upstream PV supply operations will simply cease to exist, rather than being acquired by other companies. Most of these suppliers actually have already stopped production—and will never restart.”

Consolidation casualties

Companies at the highest risk of going out of business in 2013 include integrated suppliers that manufacture PV polysilicon, ingots, wafers and cells to offer complete solutions. Second- and third-tier suppliers of crystalline silicon (c-Si) polysilicon, ingots, wafers, and cells also will struggle to stay afloat. Finally, smaller thin-film cell providers likewise will face low sales and limited market sizes, putting them on the endangered list.

The disintegration of integration

Many integrated players will fold up shop in 2013 as the large expense of building integrated facilities—and then seeing them underutilized for the better part of a year—will prove to be financially unsustainable. Many of these players are based in China. Government subsidies could be an option to keep integrated suppliers operating. However, while IHS believes that some supplier may be propped up by the Chinese government in 2013, the majority will dissolve.

Second-tier survival tactics

With price declines still occurring across the board in 2013, low-cost players will get the lion's share of the global market. Upstream second- and third-tier suppliers of polysilicon, ingots, wafers and cells will struggle to survive the year in markets that do not have local-content requirements. Many of these companies will