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Avoiding China supply-chain risks, First Solar soars


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Avoiding China supply-chain risks, First Solar soars

First Solar Inc., which has vertically integrated manufacturing operations in Ohio, Malaysia and Vietnam, has steered clear of heightened supply-chain risks related to alleged human rights abuses in China's autonomous Xinjiang region and a potential U.S. ban on goods from that region, CEO Mark Widmar said in an Oct. 27 earnings call.

"It's one of many different dimensions that a lot of our customers have as it relates to relying on China and [long-term uncertainty] around that," Widmar said. "They want to de-risk their supply as it relates to the ability to deliver against commitments and any uncertainties that could be imposed upon the Chinese supplier(s) and some of the issues that are coming up ... with forced labor."

S&P Global Market Intelligence on Oct. 21 reported on the solar photovoltaic sector's growing reliance on polysilicon feedstock from Xinjiang and calls from the top U.S. solar industry trade group, the Solar Energy Industries Association, for companies to exit the region and rely more on U.S.-based solar manufacturing.

First Solar's thin-film photovoltaic panels are different from virtually every other solar panel on the market today in that they do not rely on crystalline-silicon technology, which is dominated by manufacturers in China.

While it is too early to say how First Solar may benefit from the concerns now facing many of its rivals, China supply chain risk "clearly is top of mind" among customers, Widmar said.

Smashing estimates

Despite concerns around the continued availability of tax equity to finance utility-scale solar projects in the United States, First Solar has continued to rack up orders and advance projects in the U.S. market, which could see 14,000 MW of utility-scale solar installed in 2020, Widmar said, citing U.S. Energy Information Administration data. "This strong demand is led by several states, including Texas, California, North Carolina, Nevada and Virginia," the CEO said.

The company has added 4,100 MW of net bookings so far this year, with a contracted backlog of 6,700 MW for 2021 delivery and another 3,600 MW in 2022 and 2023. Including projects not under contract, First Solar has a "much larger pipeline of opportunities, which total 16 GW of opportunities in 2022 and beyond," Widmar said. The company sees increasing demand in Europe as the result of the European Union's aggressive new decarbonization commitments, he added.

First Solar posted an adjusted net income of $1.45 per share in the third quarter of 2020, more than double S&P Global Market Intelligence's consensus estimate of 62 cents per share. The company's $927.6 million in revenues in the quarter also smashed estimates, which averaged $692.6 million. Those results catapulted First Solar's Nasdaq-listed shares in after-hours trading to over $98 per share, a new five-year high.

For the year, First Solar expects earnings of $3.65 to $4.15 per share and net sales of $2.6 billion to $2.9 billion on shipment of up to 5,700 MW of thin-film modules.