Pricing Update: Polysilicon Prices Continue to Fall

Crystaline silicon module prices are expected to fall below US$1/W due to free-falling polysilicon prices and lowering non-active materials costs.

Polysilicon prices for the new year hover just above US$27/kg, resulting in extremely low module costs for manufacturers. In the third quarter of 2011, when polysilicon prices were closer to US$55/kg, tier one crystalline silicon (x-Si) module manufacturers such as Yingli and Trina quoted module costs of US$1.02/W. In the upcoming Q4 earnings reports, Lux Research expects x-Si module prices to fall below US$1/W due to free-falling polysilicon prices and lowering non-active materials costs from increased capacity, cheaper materials, and vertical integration.

Lux Research expects the trend for polysilicon to continue down to US$25/kg before rising back to a sustainable US$35/kg to US$40/kg. Of course, in 2002, polysilicon prices fell to similar levels then rebounded to over US$400/kg. However, with the amount of polysilicon capacity available, a repeat of history remains unlikely.

When polysilicon prices do rebound to US$35/kg to US$40/kg, do not expect module prices to go up. Based on Lux Research’s cost model, material costs would rise, cutting into margins, but efficiency gains and lower non-active material costs would eventually counterbalance the higher polysilicon price. Lux Research expects module prices to hover between US$0.90/W and US$1.00/W over the next few years.

Further Information: Lux Research (www.luxresearchinc.com)

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