Solar Energy Industry Gross Margin

Please see below the current gross margin for the different sectors in the solar energy industry:

To produce polycrystalline silicon: over 80%
To produce ingot and slice: about 25%
To produce solar cell: 18%
To produce solar module: 5%

While about 3 years ago, the gross margin for the sectors in the solar energy industry was quite different, please see below:

To produce polycrystalline silicon: 30-40%
To produce ingot and slice: about 40%
To produce solar cell: 35-40%
To produce solar module: 15-20%

The polycrystalline silicon suppliers control the whole industry, and they are happy to see the feedstock shortage, and they raised the polycrystalline silicon price and enjoy the high margin.

China Solar Panel Manufacturers Reducing Costs, Targeting Exports to the EU

In order to increase profit margins, many Chinese solar panel manufacturers plan to increase capacity to gain economies of scale.

According to surveyed manufacturers:
-- 22 percent plan to increase capacity by more than 50 percent;
-- 20 percent expect increases of 20 to 50 percent;
-- 50 percent plan increases of up to 20 percent; and
-- 8 percent plan to maintain current capacity.

One bright spot for China's exporters is the EU. Due to favorable legislation, which includes financial incentives encouraging the use of renewable energy, many solar panel manufacturers are targeting exports to this market.

Among surveyed manufacturers:
-- 74 percent plan to focus on exporting to the EU;
-- 20 percent plan to target exports to the United States; and
-- 6 percent plan to focus on the Mideast/Africa and Asia.

Sixty-Seven Percent of China Solar Panel Manufacturers Plan to Raise Prices in 2007

HONG KONG, Feb. 8 Xinhua-PRNewswire-FirstCall

Sixty-seven percent of China's solar panel manufacturers plan to raise export prices in 2007, according to Global Sources' China Sourcing Report.

"Solar cell prices, which have increased by about US$0.30 per watt in the past two years, are expected to rise further, driving the cost of solar panels higher," said Global Sources general manager of Content Development, Michael Kleist.

"With margins at about five percent for many manufacturers, the market is expected to continue to be challenging in the months ahead."

Among surveyed solar panel manufacturers' top concerns and primary challenges for the next 12 months:

-- 56 percent cited higher raw material costs;
-- 20 percent said price competition;
-- 14 percent cited design copying/piracy; and
-- 10 percent said power and labor shortages.