EysteinH's  Instablog

Recently there has been a sharp drop in wafer spot prices of above 6 % according to pvinsights.com market research from 05/11/2011. This will benefit downstream solar companies while upstream companies could have more squeeze on margins in short term.

An estimate of some solar companies with a high module or cell production capacity and revealing how much wafer production they are producing themselves or buying could be useful for the intelligent advisor. (yes that was a Benjamin Graham reference.) It is assumed it would be beneficiary to buy all wafers from outside producers in the current market trend of sharp drop in wafer prices.

Some major module&cell producers estimated capacity total for end of 2011

Notes: Rough estimates based on quarterly releases 2011, full year reports 2010 & Company estimates from GCL -POLY . SPWRA has a joint venture of 1400mw but does not disclose what % of the join venture they have. It is assumed 700mw (50%.) As I am an amateur analyst errors might have occurred. In short: Make up your own mind :)

The top 3 highest module producers seems to be shielded from the recent wafer drop prices as they don't produce any wafers themselves and can buy at lower prices.  It should be noted First solar uses thin film technology and thus do not require wafers. Fir the next quarter we might see better margins from the high module&cell producers.

You could also argue that the recent wafer drop means the wafer focused solar companies will benefit long term as the drop in price probably already is included in the stock price as this is well known in stock market. With a 6% drop already I would argue we wont see more squeeze on the wafer price for a while, it might instead be the downstream cell and module producers who will feel the next squeeze.

Disclosure: I currently have stocks in JASO, HSOL, SOL & PWER.