Despite Capacity Oversupply, Oerlikon Announces Largest 2009 Thin Film Turnkey Fab Order

By Charles Annis – Vice President, Manufacturing Research, DisplaySearch

The DisplaySearch Q3′09 Quarterly PV Cell Capacity Database & Trends Report forecasts solar cell manufacturing capacity will potentially grow at a compound annual growth rate of 49% from 2.3 GW in 2005 to 42 GW in 2013. We have received a lot of feedback from this release, most of it very positive, but some have disagreed with our forecast and suggested, “It will never be built.”

Forecasts for PV capacity and demand four years out into the future are all over the map; DisplaySearch falls some where in the middle with multiple examples of considerably more aggressive assumptions and some more conservative.

With demand and capacity moving in opposite directions in 2009, PV capacity conversion will sink to a low 28% in 2009. This implies that, on average, PV fabs will be run at low utilization and inventories are in danger of swelling, which are real concerns that can influence future expansion plans.

Nevertheless, a substantial amount of the capacity growth has already been committed to, and there is a significant amount of variation in ability and interest in capacity expansions among the large number of cell makers even in these trying times.

Oerlikon’s August 17 announcement seems to support this thesis. The company announced that it received an order for a 120 MW turnkey a-Si/µc thin film fab from NST (Nano Solar Technology), a joint venture between Rusnano and Renova in Chuvash Russia. Oerlikon stated the order is the largest for thin film equipment to date in 2009. The line will employ 2-junction Micromorph technology and will be Oerlikon’s first endeavor in Russia. The equipment will be delivered in 2010, and mass production is scheduled to begin in 2011.

We can’t be certain that there will be no changes in these announced plans before equipment ships, which is why we forecast two phases at less than 100% probability. And we do expect that our capacity forecast will change on quarterly basis. But rather than “It won’t get built,” we think a likely scenario involves the following:

• Average industry wide fab utilization will be low.
• Inventories will build.
• Consolidation may occur.
• Some weaker companies may fail.
• Some older, lower productivity fabs may be shut down.
• There may be delays in ramping up new fabs, particularly new technologies.
• Some of the 2010/2011 expansion plans may slip.

The Quarterly PV Cell Capacity Database & Trends Report enables all forecast assumptions to be checked and offers a lot of flexibility to test various potential capacity expansion scenarios and how they might affect the equipment, materials or other related PV markets. By 2012, capacity will need to start growing in order to keep up with expected high demand in 2013 and beyond. By that time, we think it is highly likely that “It” and a lot more PV cell capacity will get built.