Sad Solar Cell Sales
Samsung SDI’s solar cell energy business has flopped. The company acquired the business from Samsung Electronics for 161.3 billion won (US$159.8 million) back in July 2011. But the electric parts manufacturer is known to be suffering from such poor solar cell performance that it won't unveil specific revenue numbers.
Earlier in June 2011, Samsung SDI’s CEO Park Sang-jin announced the slogan of its new vision, “eco-friendly energy solution company,” and selected solar cells as its core future business. He showed self-confidence in the business by saying, “Samsung SDI will be reborn as an eco-friendly energy solution company,” adding, “We will grab the global number one position by creating synergy with existing energy businesses.”
With such a goal, Samsung SDI announced that it would provide a total solution with solar cells and its energy storage system (ESS). It even boasted that it would operate a 150 MW mass production line and manufacture the solar cells with 19 percent increased efficiency, the highest rate in the industry, while charging more than the average market price for them.
This rosy vision, however, didn’t even last three years. Instead, the solar cell business has now became a major nuisance for the company.
According to industry sources, Samsung SDI’s sales of solar cells has only reached a few billion won so far. In particular, Samsung SDI suffered from a more than 20 billion won (US$19.8 million) loss in operating profits owing to the sales expenses at the initial stage, which has led to the current halt of solar cell sales. As a result, the business community speculates that Samsung SDI might withdraw its solar cell business completely.
The merger on July 1 with Cheil Industries prompted Samsung SDI to announce that it will launch a differentiation strategy for its solar cell energy business. Experts and the market, however, didn't much respond. Cheil Industries produces PV paste, an electrode material that plays the role of wires when used in solar cells. The problem is that the weight of the PV paste in the cost to manufacture solar cells is much lower than that of wafers or ingots.
Skeptical about the synergy that Samsung SDI can create, some experts have devaluated the merger by saying, “The merger is more of a mechanical combination than a chemical mixing.”
Under such circumstances, some experts in the industry tentatively predict that Samsung SDI might go the same way as the PDP business. Samsung SDI decided to stop its PDP business in December this year. The PDP business has been a hindrance to the company's growth, like the solar cell business.
However, it would be not that easy to withdraw the solar cell business. It is true that the economic recession throughout the world put a negative effect on the solar energy market, but many predict that a second boom will come soon. Until 2020, the solar energy market is expected to grow more than 15 percent per year.
In addition, the electric vehicle battery business, on which Samsung SDI has focused, is currently falling behind competitors. The income from its ESS business is not significant, either. Consequently, there is speculation about whether or not Samsung SDI can continue to coddle its solar energy business, since the electric vehicle battery and ESS divisions are more in need of investment.
On the other hand, Hanwha Group, which launched its own solar cell business somewhat later, shows quite a different face. It made a profit in 3Q 2013, just a year after acquiring Q Cells SE of Germany in Oct. 2012, reportedly the world’s best solar energy company. Hanhwa is currently making a daring investment in the whole solar energy area, from the production of solar cells to the construction of a mega-scale solar energy power plant.
Currently, the company is expanding its market worldwide including to Europe and Japan, and expects to gain 100 billion won (US$98 million) in operating profits.
Solar energy experts said, “Even when the global solar energy industry becomes active again, it’s highly unlikely that Samsung SDI will secure competitiveness,” adding, “It’s because other global solar energy companies like Q Cells are dominating the market.”