Tokyuama to ramp up solar PV output with $673m Malaysia plant

Japan's biggest polysilicon maker, Tokuyama Corp, will invest US$673m in a polycrystalline silicon plant Malaysia as it seeks to boost its production capacity of solar-grade cells by 75 per cent.

The plan, announced earlier this week, comes at a time when the photovoltaic market is bracing for an oversupply that is expected to push down prices and potentially spark consolidation among cell manufacturers.

The Malaysia plant, to be completed in 2013, will have an expected annual production capacity of 6,000 tonnes - double the output of Tokyuama's original stated plan last year.

Tokyo Stock Exchange-listed Tokuyama said it had been offered tax incentives by Malaysia’s federal government and the state of Sarawak, where the facility will be located.

The plant will raise Tokuyama's annual production capacity to 8,200 tonnes, which the company believes will help it attract "new customers in addition to retaining existing ones". It currently manufactures polysilicon, mainly for semiconductors, from its sole factory in Japan's Yamaguchi prefecture, on Honshu island.

Tokuyama believes that the current slump in prices and demand for solar-grade polysilicon will improve, resulting in market growth in the medium and long-term.

Up until last year polysilicon was in short supply, but new manufacturing facilities and reduced demand as a result of the global recession have led to increased stockpiles.

DisplaySearch, a unit of US research firm NPD Group, this week released a report that warns of a shakeout among solar cell makers is now on the cards.

DisplaySearch analyst Charles Annis noted that "with demand and capacity moving in different directions, the PV industry is currently experiencing an enormous oversupply that is causing rapid price erosion and potentially setting the stage for the failure of multiple cell manufacturers, particularly companies pursing thin-film solar cells".

The report forecasts that global solar cell manufacturing capacity will grow 56 per cent this year to 17GW, rising to 42 GW in 2013.

Annis predicts the glut will be short-lived, however, with the PV industry " working through the excess capacity" as demand recovers next year and before taking off "in 2011 and beyond".