Recently, Japanese PV module makers have been adjusting their manufacturing cost structures. This is due partly to the rise in the Yen against foreign currencies, a factor that has put domestic PV manufacturing in Japan at a disadvantage. But the main driver is the recognition that competition from the new market leaders in China is different from the environment that confronted Japanese PV manufacturers in the past, and requires a different business model.
A key strategy now being employed is to relocate manufacturing fabs overseas, in an attempt to become more cost-competitive. At the start of 2012, Sharp announced that its overseas demand would be satisfied by production from Original Design Manufacturers (ODM) located in China, South Korea and Taiwan and by its (thin-film) joint-venture (3Sun) in Italy. The net effect of these changes will be to further reduce Sharp’s domestic PV production in Japan. In addition, Panasonic (formerly Sanyo) is currently establishing a new PV manufacturing facility (to include c-Si wafers, cells and modules) in Malaysia, instead of expanding legacy facilities in Japan.
As a result of these changes, overseas demand for Japanese module suppliers can be partially satisfied by manufacturing locations outside Japan. However, Japanese PV manufacturers are also aiming to maintain their dominance of the domestic PV market.
Previously, Japanese PV manufacturers were heavily export-oriented. During the past decade, the share of PV exports increased, reaching 79% of production in 2009. However, when new Japanese PV incentives revitalized the domestic market in 2011, the share of exports declined to less than 50%. In the meantime, Japan has experienced a growing influx of foreign PV modules. This accounted for approximately 20% of the 2011 Japan PV installations.
Recently, Kyocera announced they would ‘reverse-import’ modules produced at the company’s assembly plant in the Czech Republic to meet the growing demand in Japan. The company exports cells from Japan to the Czech facility and then ‘re-imports’ assembled modules back to Japan. Higher transportation costs can be offset by lower assembly costs in the Czech Republic and the favorable Yen/Euro exchange rate.
Japanese PV manufacturers continue to feel pressure from new competition in their domestic market. Consumers have now been exposed to low-cost foreign modules are more likely to consider them again in the future. Foreign manufacturers can take advantage of favorable exchange rates and available inventory at very competitive pricing. Success in the domestic market will be an important step for Japanese PV manufacturers in their quest to reclaim leading positions in the global PV market in 2012 and beyond.
