GCL plans layoff, targeting wafer plants at Yangzhou
Wafer capacity needs to go down
Following the news that LDK's plan to lay off workers from its XinYu plant and ET-Solar's shut down of its wafer production, GCL took up its own axes. It appears that a consolidation in wafer is quietly going on.
It has been quite a while that wafer makers are struggling making a profit with GCL's fast expansion pushing down wafer ASP. Multi-wafer price is down about 60% from a year ago with GCL's capacity reaching 8GW. In the meantime, most of the module makers added wafer capacity in 2011. And GCL also feels heat from its own ruthless expansion with profit down sharply from a year ago. Therefore, it is not surprising that GCL started to re-assess its expansion strategy and this cutback is likely a reckon that it went too far in expansion.
While GCL has an overall low-cost in wafer processing, its wafer cost actually varies from plant to plant, so the cutback at Yangzhou plant may mean it is less efficient than others.
Wafer vertical is much more concentrated than other verticals, the second and 3rd largest players in terms of capacity are LDK and SOL, with over 5 GW combined capacity. YGE may topple SOL in capacity this year depending on its ramp-up schedule. Therefore, it is more like a sumo-playing field and GCL's low-price strategy can backfire - hurting everyone including itself.
