First Solar Needs to Hoard Tellurium to Sustain its Current Growth

| About: First Solar, (FSLR)

The aluminum-foil business has to worry about marketing, competition, technical obsolescence, and economic downturn. First Solar (NASDAQ:FSLR) does not. If there has ever been a high-growth company that follows a reliable exponential trend, this is it.

History of Growth

2002: 1.5 MW
2003: 2.5 MW
2004: 6 MW
2005: 22 MW
2006: 50 MW ?
2007: 200 MW
2008: 380 MW projected by FSLR

This is an "APR" of 152% (2.52 factor per year). It has yearly swings up and down, but the overall correlation is high. The second half of the trend is slightly higher. To project from here, Ray Kurzweil would take the trend and run with it. Even if FSLR were to say "We just can't do what the trend is predicting" he would reply "Don't worry, you can't stop it if you tried." It's hard to believe it can continue, but the history, stability, simplicity, and marketplace are there. Except for tellurium, I can't think of any kinks.

Starting with 2008's 380 MW, the future "MW" below are per quarter. The "PE" is based on the current market cap of $18.5 Billion and expected $1.3/W profit. "Te" is the percentage of world's 2006 quarterly supply of tellurium (350 tonnes/4) that will be required with a 3 micron process.

2009 1Q: 164 MW, PE=102, Te=19%
2010 1Q: 413 MW, PE=33, Te=47%
2011 1Q: 1040 MW, PE=14, Te=119%
2012 1Q: 2620 MW, PE=6, Te=300%
2013 1Q: 6600 MW, PE=2, Te=750%

The Te percentages show how crucial it is for FSLR to hoard Te now, reduce CdTe thickness, and encourage copper producers to increase the 33% Te recovery rate. There are no known circumstances under which there will be enough Te to extend this trend to the end of 2013. Not at least for non-tandem, non-trapping, simple CdTe.

Disclosure: I may make my first purchase of FSLR on December 03, 2007.

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Tagged: , Semiconductor - Specialized
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