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By Ucilia Wang

SolarWorld (OTCPK:SRWRF) plans to expand its solar panel production in the United States while also boosting its solar cell manufacturing, the company said Monday.

Germany-based SolarWorld said it would be adding a 350-megawatt solar panel assembly plant next to its fairly new solar cell factory in Hillsboro, Ore. by 2011. The company has a 150-megawatt solar panel factory in Camarillo, Calif.

SolarWorld opened its Hillsboro facility last October to produce silicon wafers and monocrystalline silicon cells. At the time, the company had talked about boosting the cell manufacturing to 150 megawatts this year and eventually 500 megawatts by 2010 (see Q&A: Will U.S. Become a Solar World?). Ben Santarris, a spokesman for SolarWorld, on Monday declined to disclose the company's current wafer and cell capacities at Hillsboro.

On Monday, SolarWorld said it expects its wafer, cell and module production capacity to reach 500 megawatts per year for each segment by 2011.

The company is among a handful of European and Asian solar energy equipment manufacturers that have set up factories in the United States in recent years. Two Germany companies, Solon and Schott Solar, are among them (see Schott Solar Opens New Factory, Considers Biz Beyond Manufacturing). Sanyo of Japan, meanwhile, is building a silicon ingot and wafer factory in Salem, Ore.

These companies planned their foray into the U.S. market before the financial market crumbled. But their timing would allow them to take advantage of new policies that subsidize solar energy generation and encourage the use of American-based equipment.

In recent weeks, several financial analysts have reported seeing a pick-up in solar equipment demand through November, but the outlook for 2010 remains murky.

The global solar market has faced an oversupply of products over the past year thanks mostly to a dramatic reduction of government subsidies in Spain and the recession (see Solar Panel Glut Could Last Until 2012, Says Report).

But that hasn't stopped companies from planning factory expansion (see First Solar to Build 100MW Factory in France and SunPower Plans for Made-In-America Products). Many of them believe the market will only improve from the current slump. Generous incentives in countries such as Germany, Italy and the United States are likely to remain in place for years to come. Meanwhile, China is implementing policies in place to boost domestic solar generation.

Beefing up production capacities isn't just a way to meet potential demand. It also enables manufacturers to reduce production costs.

SolarWorld certainly is up against other large-scale manufacturers in the U.S. market, even if those competitors don't have U.S. factories.

In a research note Monday, Mark Bachman at Pacific Crest Securities wrote that SolarWorld is "taking a backseat" to competitors such as Suntech Power (NYSE:STP), Sharp (OTCPK:SHCAY) and SunPower (SPWRA) in the California market, the largest in the country.

Bachman analyzed applications installers submitted to California for getting the state incentives to install solar energy systems, and found that 42 percent of the applications for the third quarter came from Suntech, Sharp and SunPower.

The data for applications are different than those for completed installations (state incentives are given out only when installations are done). Bachman believed that the applications provide a good indication of the future demand and the competitive landscape of the manufacturers.

Installers could end up using panels made by different manufacturers than what they initially stated on the applications, however.

Overall, installers have submitted about 169.3 megawatts of applications so far this year, Bachman wrote. Of the total, solar panels from Sharp make up 30.5 megawatts, 27.5 megawatts from SunPower, 18.4 megawatts from Suntech and 18 megawatts from SolarWorld.

Source: SolarWorld Plans U.S. Factory Expansion Amid Stiff Competition