Bloomberg News

Suntech May Reduce Some Solar Output in First Quarter, CEO Says

November 01, 2011

Oct. 31 (Bloomberg) -- Suntech Power Holdings Co. Ltd., the biggest maker of silicon-based solar modules, said it may reduce some of its manufacturing output in the first quarter of next year because of a seasonal dip in demand.

“We’re running at full capacity right now, but sometimes in the first quarter there is some seasonality in demand,” Chief Executive Officer Zhengrong Shi said in an interview in Singapore today. “We might reduce some” capacity in the first quarter, he said.

The Chinese company has led the industry in ramping up production capacity, depressing the cost of solar cells. That’s helped drive demand while reducing margins for manufacturers. First Solar Inc., Suntech’s biggest U.S. rival, cut its earnings outlook last week.

Shi said he expected a surge in new orders in Germany in the final quarter of this year after the government said it would reduce subsidies paid through a so-called feed-in tariff in January 2012.

“When there’s an announcement in the reduction of feed-in tariffs, there’ll usually be a rush of installations,” he said. “Yes, we’re seeing this at the moment,” in Germany, Shi said.

He also expects the industry to consolidate further as smaller producers combine to cope with slimmer margins.

“The market is already consolidating because customers are flying to quality, track record, bankability,” Shi said. “The top six manufacturers had 55 percent of the market share in the second quarter. Last year, it was 26 percent. So you’re already seeing that.”

--With assistance from Reed Landberg in London. Editors: Reed Landberg, Tony Barrett

To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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