Are U.S. Solar Companies Losing Market Share to Their Chinese Competitors?

First Solar (FSLR) reported Q3 earnings with revenue down from $520M of Q2 to $480M, however the company beat on EPS by 0.05c margin. The company raised 2009 guidance to $1.975B to $2.025B from previously announced numbers.

One positive movement in the solar sector is that inventory is getting lower according to FSLR's CEO. The inventory depletion is across the whole solar sector, which is positive for the rest of the industry. For the rebate program, it is not working as expected according to the company. It is likely Chinese solar names are gaining market shares in Europe because company like Trina Solar (TSL) and Solarfun Power (SOLF) raised shipment guidance for Q3 a few weeks back. The cost base is much more competitive for Asian solar companies. Overall First Solar presented a mixed earnings report (conference call transcript here).

We also had Sunpower (SPWRA) earnings reported last week. The company said its third-quarter profits fell 48 percent to 13 cents per share. On the bright side, excluding one-time charges, adjusted earnings amounted to 42 cents per share, beating Wall Street estimates of 40 cents per share. For the full year, SunPower said it expects adjusted earnings to be between $1.15 per share and $1.25 per share on revenue of $1.43 billion to $1.5 billion. That's slimmed down from its July estimates of $1.15 per share to $1.60 per share on revenue of $1.35 billion to $1.7 billion. Again the company cut Q4 outlook, despite acknowledging that the industry is improving significantly in terms of demand. That may mean shipments from Chinese solar companies are gaining momentum because they are more competitive. Evidence of this is LDK recently joining TSL and SOLF and raising Q3 and 2009 shipment guidance.

Disclosure: Long FSLR, SOLF and TSL.

Comments

[Douglas Kor...:]

This is a significant problem; Chinese allow manufacture, but after they learn how to do it, they improve it, and can undercut any price because of their "misery" savings: no workers comp, no environmental regs, no pollution controls, no wages sometimes.

Oct 31 12:41 AM

[jerrydd:]

Douglas, you forgot the 30% under valuation of their currency and refusal to allow our US made products sold there that makes it hard to compete.

We need to force this and make a good US energy policy by making oil, coal pay their full direct, indirect subsidies with a straight fossil fuel tax or our wealth will go to China and OPEC, Russia, making us into a has been nation..

Oct 31 10:10 AM

[Robert Cast...:]

Kevin, this is not new. I pointed out about the problem in SeekingAlopha on March 31 - "Economic and Technical Factors Create Winners and Losers in the Solar Cell Market" - how the Chinese are the big winners due to subsidies. They get practically free loans and stimulus money. I won't say the naughty word "dumping" here, but they will drive many non-Asian solar manufacturers out of business - read my recent article in my column on TheStreet.com where I discuss details.

Oct 31 11:36 AM

[a. palmer jr.:]

We have it in our power to stop it in it's tracks; just buy American. I know it costs a little more in the short term but it will save us in the long term. That not only applies to solar cells but everything you buy.

Oct 31 11:47 AM

[a. palmer jr.:]

I also might add to my previous statement: American companies also have a responsibility to make the best product they can and at a price that is reasonable. Workers have a responsibility to quit demanding rights that they know are unreasonable. The government has the easy responsibility of staying out of the way!

Oct 31 11:52 AM

[Fred W:]

This is, and will continue to be, part of the Chinese business model.

Oct 31 02:10 PM