SUN PROFITS FALLING, PARTS HOLDING

PV Component Profits 70% Lower in Q4’11, but Module Suppliers Still Hold Lion’s Share
12 October 2011 (IMS Research)

"PV component profits are set to fall by 70% year-on-year in Q4’11…[A] new analysis from IMS Research…of the polysilicon, wafer, cell, module and inverter industries found that that collapsing prices throughout 2011 will cause gross margins for the whole PV industry combined to slide by 17 percentage points to just 12.4% in Q4’11…

"…[D]espite this worrying news, margins and profit will actually increase sequentially in Q4’11 as much of the collapse in margins had already happened earlier in 2011…PV module suppliers [felt] the brunt of the [2011] price collapse…[but] they still hold the lion’s share of PV component profits…[W]ithin the PV module supply chain, polysilicon suppliers currently enjoy some of the highest margins but their profits are still less than half those generated by module suppliers…"

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"Of the five industries studied, IMS Research found that inverter suppliers now enjoy the highest gross margins, despite the recent oversupply and price reductions that the industry has suffered. Despite accounting for a relatively small part of PV system hardware costs, the research found that inverter suppliers will generate 17% of total industry profits in 2011…

"…IMS Research predicts further gloom for the industry and forecasts that margins will slide further in 2012 and will reach just 10.4% in the first quarter of next year…"