Looking back to the PV industry last year, wafer price reflected an uptrend after cell and module manufacturers started to gain profit. Manufacturers are looking forward for a price-hike as they are positive about the demand in 2014. They are also getting ready for the next big wave with all the expansion news spreading around. EnergyTrend has an exclusive interview with Dr. Wen-Hui Pan, director of Gintech, to talk about the developing strategies and market outlook in 2014.
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Cell Price Will Eventually Increases in 2014 Like Wafer Price
Pan believes that every industry will have its dynamic balance. If cell and module manufacturers could make money last year, poly and wafer manufacturers can also turn around losses. Although wafer price substantially increased in 4Q13, its average price did not allow manufacturers to turn loss into profit. Yet, wafer price will continuously increase in 1Q14; Module price may not have significant changes in the short run due to the minimum price set between EU and China; Cell manufacturers, which stuck in the middle, is uncertain about the right time to raise the price. After all, Chinese manufacturers are still the dominators of the price and Taiwan’s cell price can be US$0.02-0.03/W higher than China’s. As for when will the price be raised and how much it will be raised will have to depend on wafer condition. Pan believes that it will not be a problem to revise the wafer price upward, but ceiling price of US$1/piece will take awhile to reach.
Blue Ocean Strategy for High-Efficiency Market
Gintech indicates that cell demand totaled 34.7GW in 2013. Multi-si cell demand was 21.9GW, continuing to be the mainstream. Demand for mono-si and thin-film cells was 9.4GW and 3.5GW, respectively. Among which, P-type mono-si cell demand was 7.7GW, representing 22% of the total cell demand; N-type mono-si cell demand was 1.7GW. In order to correspond to the distributed PV market growth, mono-si demand continues to increase. The market also focuses more on high-efficiency products. Currently, average multi-si cell efficiency is around 17.4%-17.6%. Yet, Gintech believes that about 30% of Taiwanese manufacturers can mass produce cells with conversion efficiency of 17.6%-18.0%. As for Gintech’s diamond multi-si cells, the conversion efficiency can reach up to 18.5%. In terms of mono-si cells, Taiwan’s product conversion efficiency is around 19.0%-19.2% while it can reach 20.5% for diamond mono-si cells. After coming up with high-quality products, Gintech plans to expand capacity for high-efficiency products. They are planning to win the market share by using their outstandingtechnology rather than cost reduction. They will enhance their product competitiveness to step into the blue ocean market and start another efficiency war.
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Operation Follows Supply and Demand Equilibrium
EnergyTrend projects that demand in 2014 will be around 42GW. Pan believes that the threshold for current market technology and efficiency will be higher. The market will automatically eliminate the manufacturers that are fall behind. By 2H14, effective capacity will only be 41.4GW and the expansion plans for major suppliers in China will mostly focus on module. For cells, supply and demand may achieve equilibrium. Gintech is planning to handle all market changes in 2014 with flexibility.
In terms of OEM, there are larger uncertainties for wafer price. However, Gintech will still leave a certain amount of capacity to process OEM orders. Recently, OEM orders accounts for 25%-30% of Gintech’s total orders.
Among cells, Gintech believes that about 30% of demand will come from mono-si in 2014. The proportion of mono-si cell shipment will be adjusted based on the market change. Also, the company will continue to produce high-efficiency multi-si cells.
In terms of modules, certain cell clients have asked Taiwanese manufacturers to ship out modules rather than cells so they can have better control over their supply chain cost. Hence, Taiwanese manufacturers have started planning for module expansion. However, Gintech believes that even if they expand module capacity, it will still be difficult to compete with Chinese manufacturers from economies of scale aspect. Instead, modules should be more committed to manufacturing differentiation. For now, Gintech is still assessing whether it’s required to expand module capacity. They may end up choose to cooperate with others.
EnergyTrend Point of View
Gintech had recognized the loss from long-term contract termination in 3Q13. By maintaining stable partnership with SunEdison, the longest long-term contract has finally been terminated under win-win condition. Since there will be a large amount of PV system installation in 1Q14 before the fiscal year ends in the Japanese market, order visibility in 1Q14 will be in good shape and shipment volume will remain high like 4Q13. Also, production may be fully utilized again and shipment to Japan will represent about 40% of the total shipment. With PV market and high-efficiency cell demand turning strong, Gintech is planning to expand capacity from 1.5GW to 1.8GW in 2H14. It’s believed that Gintech is likely to maintain their status as a first-tier Taiwanese cell manufacturer as they continue strengthen their diamond series of high-efficiency products.
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