Chinese solar companies are starting to face tough days, as they are struggling to sustainably carry on the operations due to an increasingly strengthning debt obligations and according to WSJ's report employee layoffs may also eat up their global market share as the demand for Solar PV installations are growing globally.
Solarbuzz, a leading solar research firm said that average price of solar modules in EU have fallen by 20% in the past year, which is creating doldrums as Europe is the biggest market for Chinese firms.
Suntech, the world's largest manufacturer of solar module- based in China, said in a statement on Monday that it would temporarily stop manufacturing of a quarter of its capacity as their is an increasing developing pressure due to high oversupply of Solar Modules and antidumping tariffs imposed on them in the U.S. and an antidumping probe in the EU.
Suntech also said in it's press release that it would layoff about 1,500 employees in mainland China inorder to reduce their production of Solar cell capacity from 2.4GW to about 1.8GW, so as to reduce their OPEX by 20% by end of this year. But it's solar module and it's wafer capacity will be untouched at 1.6GW.
Other large Chinese solar companies are also facing the heat, as their shares values are also following a downard trend. Investment bank, Maxim Group said that by the end of the Q1'12, China's leading solar companies had a combined debt of $17.5 billion.
How can Solar companies survive this crisis?
Suprisingly the way ahead from this crisis for the solar manufacturers is that they need to produce more, not less, to help lower their average costs and become profitable again, which is quite an irony.
Also there are way out of this scenario as solar market in U.S., India, China and Japan are showing consistent growth and they are offsetting Europe's weaker demand.As the gross margins of module manufacturers are dipping these companies will need to focus on high volume manufacturing with lesser gross margins.
