Suntech slashes solar cell production in China

The company says that after closing some of its solar cell production lines in China, its operational solar cell capacity will be temporarily reduced to 1.8GW, affecting some 1,500 jobs.

In August Suntech founder and chief executive Dr. Zhengrong Shi stepped down as CEO to become the company’s executive chairman and chief strategy officer. And earlier, another top Suntech executive, chief commercial officer Andrew Beebe, resigned.

David King, Suntech's CEO, said of the latest development, "In this rapidly evolving solar market, it is crucial to evaluate market trends and adapt our business to suit. In light of the preliminary U.S. anti-dumping tariff, the European anti-dumping investigation, and oversupply of solar modules, we have decided to right-size our production capacity and continue to optimize our organization. With a smaller manufacturing base we will be able to lower production cost, increase utilization rates and improve product performance. With these and other initiatives we target to create a sustainable business model and return to positive operating cash flow in 2013."

Suntech is the latest in a long line of companies to feel the squeeze in the PV sector.

Post the restructuring, Suntech reports that its operational solar cell capacity will temporarily be reduced to 1.8GW, module capacity will remain at 2.4GW and wafer capacity will remain at 1.6GW.

The consolidation of solar cell capacity is expected to affect approximately 1,500 employees in China, though the majority of employees will be offered positions at other production facilities. The restructuring initiatives are expected to substantially improve the utilisation rate of solar cell production facilities, reported the company.

In addition, Suntech's panel cost is expected to improve as production will be concentrated at the Company's highest efficiency, lowest cost manufacturing facilities.

Suntech is on track to reduce its operating expenses (excluding non-recurring items) by 20% in 2012 compared with 2011. Impairments related to the closure of facilities, severance payments and other related expenses are currently being assessed and will be disclosed in the Company's third quarter 2012 earnings report.

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Photovoltaics (PV)  •  Policy, investment and markets  •  Solar electricity