Re:Party is over for dirt-cheap solar panels, says China exe...
by Gibbon1 on Friday January 25, 2019 @09:33PM
(#19004402)
I suspect vertical integration works when your key intermediate manufacturing inputs aren't commodities. And you have enough scale to overcome production granularity issues.
Re:Party is over for dirt-cheap solar panels, says China exe...
by stcredzero on Saturday January 26, 2019 @08:11PM
(#19009745)
I suspect vertical integration works when your key intermediate manufacturing inputs aren't commodities.
What if your manufacturing outputs are also getting to be commodities? The example I was thinking of was refrigerated cargo containers. The inputs are obviously commodities. The outputs are also getting to the point where the cost of financing to build stock for sale or lease is getting to be onerous for smaller players.
This is one of the top manufacturers today:
https://www.hanwha-qcells.com/
A Chinese cell and module manufacturer acquired a Chinese ingot manufacturer. Korea's Hanwha Group subsequently acquired this merged Chinese entity as well as the German solar manufacturer Q-Cells. The merged Hanwha Q-Cells is vertically integrated from cells to modules.
A handful of manufacturers like GCL have vertically integrated even further:
- Refined silicon production
- Ingot production from purified silicon
- Wafers from ingots
- Cells from wafers
- Modules from cells
I don't know if that depth of integration makes sense long-term or not. Some companies have been burned in the past as they integrated with producers that weren't close enough to the leading edge. All of these steps are evolving rapidly in small increments; a vertically integrated producer has to keep pretty close to the leading edge at every stage if they don't want to see their integration advantages reverse.