180 solar manufacturing firms set to merge or fold, analysts expect.

REW: Raj Prabhu, Managing Partner of Mercom Capital: “If you are in downstream you are healthy.  If you’re manufacturing, you’re not healthy.” GTM Research’s Shyam Metha authored a comprehensive report that was released in October entitled, “Global PV Module Manufacturers 2013: Competitive Positioning, Consolidation and the China Factor,” in which he predicted that up to 180 solar PV module manufacturers will either be acquired or will fold over the next two years, the majority of which will come from high-cost manufacturing markets in the U.S., Europe, and Canada. “It’s the devil or the deep blue sea for the majority of these high-cost firms,” said Mehta in a statement. “Manufacturing costs for firms in Europe, the U.S. and Japan are currently over 80 cents per watt. The cost for their Chinese competitors is between 58 cents and 68 cents per watt. The writing is on the wall; these companies will either take what they can get via acquisition or they will bow out.” ….The report estimates that about 54 of the 180 “ill-fated” firms will come from China. Most of these are what Mehta calls “solar zombies,” companies with manufacturing capacities less than 300 megawatts that have operated uncompetitively with support from the government for years. …..Mehta pointed to the municipal loan that LDK Solar received in July 2012 and the China Development Bank’s renewal of its pledge to support 12 selected domestic suppliers as evidence that the Chinese government will continue to provide financial support to established firms with large workforces in order to cover near-term debt obligations, or possibly encourage diversified Chinese industrial conglomerates to acquire these companies. Potential beneficiaries of these strategies include Trina Solar, Yingli Green Energy, Suntech Power, JA Solar, Jinko Solar and Renesola.  Together, these companies comprise more than 20 percent of existing global module capacity.”