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Summary:

SunPower, whose fight for survival forced it to find a new owner and embark on a significant cost-reduction plan, said on Monday that it will stop producing cells at one of its factories to save money.

SunPower project

Solar cell giant SunPower, whose fight for survival forced it to find a new owner in oil firm Total, said on Monday that it will stop producing cells at one of its factories to save money.

The San Jose company is shutting down the 125 MW factory in the Philippines and looking for tenants to occupy that space, SunPower said. The factory, which SunPower calls Fab 1, occupies 215,000 square feet and began production in the fall of 2004, according to the company’s 2011 annual report. That leaves Fab 2 that opened in 2007 in the Philippines, and Fab 3, a joint venture with AUO Optronics, in Malaysia. Fab 3 began production in October 2010 and had 600 MW of capacity as of January 1 this year.

The factory closure is part of SunPower’s larger plan to cut costs and stay competitive in a market downturn. The company makes silicon cells and assembles them into panels, and its products can absorb and convert more sunlight into electricity than any other silicon solar cell and panel makers in the world. But it’s been hit hard financially in the past year when supply far outstripped demand in the global market and prices for solar panels overall fell by around 50 percent.

Just about every solar manufacturer has lost money, and many closed factories and filed for bankruptcies. SunPower, which is also a power project developer, had to line up a financial backer to help it out, and it sold 66 percent of its common stock to French oil giant Total last year. SunPower’s CEO, Tom Werner, told financial analysts in February that the company will be going “on the offense” in 2012.

Part of the offensive strategy is to roll out a technology to make more efficient solar cells. The company announced last month that it had started incorporating the new technology to make the third-generation Maxeon cell that can convert as much as 24 percent of the sunlight into electricity. In comparison, when SunPower opened Fab 3 in 2010, it was producing cells there at just over 22 percent efficiency.

SunPower has started to convert all 12 production lines at Fab 2 to make the new Maxeon cells, and it expects to complete the conversion by the end of 2012. Fab 2 had 575 MW of annual production capacity when SunPower filed its 2011 annual report, but the figure should go up since more efficient cells can produce more watts of power. But efficiency improvement will not completely make up for the loss of the 125 MW production capacity at Fab 1, the company said.

SunPower said it plans to transfer employees from Fab 1 to Fab 2 or help them line up jobs with the new tenants who will take over the Fab 1 space. It didn’t disclose the number of employees that will be affected by the Fab 1 closure. The company also will move some factory equipment from Fab 1 to Fab 2 to save money.

Photo courtesy of SunPower

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  1. Donald Wagner Tuesday, April 17, 2012

    This is actually a very smart move. With the balance of systems (BOS) cost going down slower than the panels, high efficiency becomes more important. For areas with good sunlight (DNI), which is about 1/3 of the US and can use a tracker (probably rule out most residential), I expect concentrated photovoltaics (CPV) to win. For other areas the higher efficeincy non concentrating panels should win. If Sunpower can make it the next two years, they should be a leading and profitable company. For the concntrated market, seperating and concetrating the sunlight (like the Rainbow Concentrator) should give higher efficiencies and should win that market.

  2. Seems to me like they are closing their oldest and most likely most inefficient fab. Solar manufacturing has evolved significantly in the past five years. It’s a tough market right now and those vertically integrated firms that can continue to manage costs should come out big winners.

  3. SunPower is a very dynamic company which has taken every step necessary to stay competitive. It is sad to see old timers like Q-Cells going out of business. 2011 was definitely a painful year for the industry and even though we are still expecting a few unpleasant surprises this years we hope the solar market finds an economic balance soon.

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