Top Tier PV Silicon And Wafer Producers Head To Profit

PV (photovoltaic) polysilicon prices
are forecast to drop 48% and wafer prices 56% year-over-year in 2012. With such
severe price declines, only 12 Chinese PV polysilicon manufacturers are still
producing, and more than half of these companies are running at significantly
reduced utilization rates. Industry-wide, wafering plant utilization is
forecast to average only 53% in 2012.

But as prices approach current cash
costs of even tier 1 makers, price declines are expected to slow to less than
7% per year. Average 2013 polysilicon prices are projected to be $23/Kg and
wafer prices to be $0.25/W. As described in the NPD Solarbuzz Q2'12 Polysilicon
and Wafer Supply Chain Quarterly Report, even at these low prices, top tier
makers have a path to positive margins.

"Although the 30% plus net profit
margins of the not-so-distant past are unlikely to be seen again by any PV
polysilicon makers in the next few years, leading producers are targeting total
costs of less than $20 per kilogram in 2013, which may enable modest
profitability," stated Charles Annis, Vice President at NPD Solarbuzz.

Lower-priced polysilicon translates
to lower-cost PV wafers. And wafer makers are continuing to drive down
processing costs with holistic approaches to reducing slurry consumption,
increasing recycling, reducing kerf loss, reducing electricity consumption,
increasing conversion efficiency, and more productivity enhancements.

"Many of the less cost-competitive PV
industry participants will not survive the new low-priced environment, but even
at prices $0.25/W, top-tier wafer makers, particularly those with low-cost
internal polysilicon supply, are targeting 12% or better margins," added Annis.

In the new normal, low-priced PV
polysilicon and wafer industry environments, cost reduction is critical for
both survival and success. The NPD Solarbuzz Polysilicon and Wafer Supply Chain
Quarterly Report tracks and analyzes cost metrics on a quarterly basis.