This means the shakeout among manufacturers will likely continue for some time. "The industry simply cannot support 300-plus cell and modular manufacturers, so the companies left will capitulate and exit the industry," said Zhengrong Shi, chief executive of Chinese solar-panel manufacturer Suntech Power Holdings Co., during a late-November call with investors. Suntech is cutting its operating expenses by at least 20% next year as it hopes to stem this year's 70% stock-price slide.
The glut of manufacturers stems from various sources over the last several years, including efforts by the U.S. government to encourage clean technology, venture capitalists pouring into the sector and institutional investors buying into IPO issues of solar companies amid an oil-price boom and a heightened sense of climate-change urgency. At the same time, European governments offered rich subsidies for solar installation, driving demand in the market.
"People were doing what they can to make a profit, without thinking ahead," said Pallavi Madakasira, an analyst with research firm Lux Research Inc.
