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Author InfoLink
Updated October 16, 2017

The three major Taiwanese PV cell makers – Gintech, NSP, and Solartech announced on Oct. 16 that they have signed the Consolidated Signs Letter of Intent this morning to promote the idea of the three companies combining into one. They have come to a consensus that NSP will continue to keep its position while the rest of the two companies will be merged. Once an acquisition is completed, the new company will be given a new name called United Renewable Energy Co., Ltd. (UREC). NSP’s Dr. Sam Hong will be the Chairman and Gintech’s Dr. Wen-Whe Pan will be the CEO of UREC. The acquisition is expecting to be completed by 3Q18.
 

InfoLink Point of View

After the three cell makers complete the acquisition, judging simply from the cell capacity, the total capacity of UREC will only be slightly lower than the world’s largest cell maker – Tongwei’s PV cell capacity of 5.8GW. However, the factories of the three companies are separated. The performances of their equipment are also not as good as the expanding cell capacities in the previous two years. Aside from the more mature PERC technology and bargaining ability of raw materials, it’s actually difficult for the new company to bring into full play.

Going over the capacity deployment of the three companies, although Gintech has its subsidiary Utech Solar while NSP/Solartech have their own module capacities, the capacities of wafer and module are much lower than the cell capacity. Judging from the most important customer channel, the total module capacity is less than 1GW for the three manufacturers. As a result, the expansion of the customer channel still has to rely on what each manufacturer has accumulated previously.
 

Sales

Looking back on the development of the three cell makers, they are actually not much different from other Taiwanese makers. About 60-70% of the orders came from China or China’s module factories in Southeast Asia. The three manufacturers’ customers are mostly overlapped. For the overseas markets, Solartech has put a lot of effort in Europe for a long time, while Gintech had quite some breakthrough in India and Southeast Asia recently. In the end, manufacturers will have to compete with other cell makers from the cost perspective.

If the cost is not lowered significantly after the acquisition, the price gap between Taiwanese and Chinese cell makers still reached US$ 0.02/W, which is not much different from the sales development and progress before the acquisition. With such huge capacity, the three companies will have more pressures during the off-peak selling season. 
 

Purchasing

Another advantage of the merger is the procurement. Over the past year, Taiwanese cell makers always first face the out-of-stock problem of wafers when the mono/multi-Si wafers are in short supply. If the capacities are merged, wafer suppliers may be more confident or have more willingness to supply the “large cell manufacturer”, bringing more advantages to the future procurement.
 

R&D

Mono-Si PERC is the strength of both Gintech and NSP, while multi-Si PERC is Solartech’s strength. On the other hand, NSP also has R&D experiences in HJT. Each company has its own high-efficiency capacities. After the three makers merge, whether they will have smooth communications for the R&D remains to be seen.

From the overall strategy point of view, the procurement and operating costs may be lowered slightly after the acquisition, which will be easier to get the funding or financial support in Taiwan. It’s highly possible that there will be other cell manufacturers join them, expanding the platform. The related funding not only allows Taiwanese manufacturers that have already reduced the capital spending for a long time to increase their equipment investment for cell and modules again, but also can strengthen the supply chain of the related materials.

Overall, the acquisition will begin in the third quarter of next year. But as the off-peak selling season approaches, how to use the funding to strength the existing abilities in the next few quarters and how to solve the zero brand advantages, uncertain downstream customer channels, higher production costs compare to Chinese cell makers, and low responsiveness for Taiwanese manufacturers still requires deep thought.