Thursday, 3 November 2011

Glut forces Panasonic to axe solar panel plan

25 Oct 2011, Page: 26

Panasonic Corporation is dropping a plan to convert a plasma TV factory in westernJapan into one making solar panels, as fierce cost competition, a global solar cell supply glut and the strong yen combine to make the venture unprofitable. Earlier this year, Panasonic said it was planning to move the equipment for manufacturing plasma screens at its Amagasaki No 1 plant in Hyogo Prefecture to China. At the time, the company said it wanted instead to produce solar panels at the plant sometime in the next financial year. Panasonic's change of plan exemplifies the struggle Japan's solar panel makers are facing, as booming Chinese solar panel makers create a global inventory glut, while the strong yen makes Japanese exports too expensive.

Sharp Corporation, another major Japanese solar panel maker, has been trying to localise its overseas solar power business. The company has recently built a solar panel manufacturing plant in Sicily in a joint venture with Italian utility End l and STMicroelectronics. Scrapping the plan to produce solar panels at the Amagasaki No 1 plant would be positive for Panasonic, said Mizuho Investors Securities analyst Nobuo Kurahashi. "But this is positive as a defensive move, and the big question remains as to how Panasonic will make its solar business a real growth driver", he said.

When Panasonic acquired a majority stake in Sanyo Electric in 2009, the latter's strength in energy efficient technology particularly solar panels and rechargeable batteries was cited as one of the reasons for the deal. Since then, the global market for solar panels has changed dramatically. Chinese solar cell makers, such as JA Solar Holdings and Suntech Power, are now among the world's biggest producers, thanks in part to Beijing's support for renewable-energy businesses.

"Continued solar module overproduction will lead to sustained price pressure across global photovoltaic markets", said solar market research firm Solarbuzz in a report in late September. "While some manufacturers have started to cut back production and shipment plans, tier one Chinese companies have maintained their full-year shipment guidance", likely causing oversupply, Solarbuzz said in the report. For now, Panasonic is expected to continue producing plasma display panels at the Amagasaki No 1 plant.

To turn around its loss-making TV business, Panasonic is considering selling a factory in Japan that makes liquid crystal display panels for televisions, and scaling down plasma TV panel output at another Japanese plant. Panasonic is the world's biggest maker of plasma TVs, but the vast majority sold today are liquid crystal display models, which Panasonic also makes. In the three months from April to June, LCD televisions took up 80.1% of all units shipped world-wide, while plasma TVs accounted for only 7.6%, according to DisplaySearch.