The result has been a significant reduction in order backlogs for PV equipment suppliers, with Q3’12 representing the fourth consecutive quarter of 30% Q/Q backlog declines. When combined with maintenance-only quantities of new orders seen by PV equipment suppliers, the PV book-to-bill ratio has fallen into negative territory, the first time since the industry began to take off in the mid-2000s.
Ray Lian, Analyst at NPD Solarbuzz, explained: “Negative book-to-bill ratios are extremely rare within established capital equipment sectors. Even the worst downturns in the semiconductor industry have been characterized by positive book-to-bill ratios. Negative book-to-bill metrics suggest that most legacy PV capacity expansion plans have now been cancelled. This satisfies one of the first requirements for the PV industry to rebound from its overcapacity-driven downturn phase.”
Figure 1: Adjusted PV Book-to-Bill Ratios from Q3’07 to Q3’12
Source: NPD Solarbuzz PV Equipment Quarterly
Customers of PV equipment suppliers - PV cell and module makers - continue to undergo a painful capacity rationalization process, caused by chronic over-investment dating back to 2010. However, quarterly manufacturing capacity for c-Si cells and modules remains constant at 13 GW, with new capacity coming online cancelling out the existing capacity that is being shuttered and idled.
During Q3’12, utilization rates for cell and module capacity had to be reduced considerably in an attempt to restore inventories to more manageable levels. However, PV manufacturers remain highly cautious about short-term capacity and production plans, with growing uncertainty related to the outcomes of several ongoing anti-dumping investigations. Some Chinese c-Si manufacturers are considering geographic diversification of their manufacturing capacity.
PV equipment spending is forecast to decline by more than 66% during 2012, and to remain at pre-2008 levels of $5 billion during 2013. Equipment spending is not forecast to rebound until at least 2014, with tier 1 spending accounting for over 90% of addressable revenues. PV equipment spending over the next 12-18 months will be comprised of process