Canadian Solar Inc. is doubling down on a manufacturing expansion in Asia this year in an effort to gain more cost control and grab a larger share of a fast-growing solar market.
The company has raised 2022 guidance for silicon ingot, wafer and cell production by 96%, 38% and 37%, respectively, compared to plans it released in March. The move was announced as Canadian Solar and other equipment makers confront a resurgence in polysilicon prices amid booming solar demand globally.
"At our core solar module business, our goal is to expand capacity, increase the level of vertical integration," Yan Zhuang, a director at Canadian Solar, said on a May 24 earnings call. "... Vertical integration allows us to further internalize our supply chain, reduce market risk and drive innovation and product leadership."
Canadian Solar said it expects solar panel shipments to increase by at least 38% this year, to between 20 GW to 22 GW.
"The global demand almost doubled from ... about 100 GW in 2019, pre-pandemic, to now more than 200 GW a year," said Canadian Solar CFO Huifeng Chang, adding that the company's planned listing of a subsidiary in China will provide "financial firepower" to support its growth strategy.
Read More: A decade into tariffs, US solar manufacturing is still deep in Asia's shadow
In the U.S., a trade investigation by the Commerce Department disrupted activity in parts of the country's solar market, though Canadian Solar said it has continued importing panels despite the risk of retroactive tariffs.
"[With] some customers, we're taking the risk, but with conditions. So, we sell, actually, at a premium to cover the risk, and we also retain our rights to terminate shipments" in the event of an adverse outcome in the Commerce Department investigation, Zhuang said. In other cases, buyers are sharing the risk of tariffs or taking it on themselves, Zhuang added.
Asked about the prospect for U.S. manufacturing, Canadian Solar Chairman, President and CEO Xiaohua Qu said the company likely would require "long-lasting" incentives to set up a base of production in America.
Import tariffs alone are "not enough," Qu added.
Canadian Solar reported first-quarter 2022 earnings of 14 cents per diluted share on revenues of $1.25 billion. A year earlier, the company reported earnings of 36 cents per diluted share on earnings of $1.09 billion.
It reiterated 2022 revenue guidance in the range of $7 billion to $7.5 billion compared to revenues of $5.3 billion last year.
Canadian Solar's stock price was up 3.67% at $30.21 at 1:35 p.m. ET on May 24.
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