Sharp's solar business is on track to turn its first annual profit this year as the company looks to expand production and forge partnerships with corporations worldwide to expand the use of solar power generation.
The business unit is expected is generate an operating profit of
In the last two quarters the business has been profitable, turning around three consecutive quarters of losses, and Sharp this week reiterated it expects the unit to finish the year in the black. It also increased the unit's sales forecast for the fiscal year by
Sharp has been enjoying strong demand from Japan, where a subsidy program was introduced to encourage sales of residential solar panels and electricity companies were forced to raise the price at which they buy surplus power. Business overseas has been tough after some countries -- most notably Spain -- dropped solar subsidy programs. As a result the global market for solar cells registered its first major contraction in 2009, according to a December estimate by DisplaySearch.
The outlook for 2010 is much brighter with demand expected to rebound by 38 percent to 7.14 gigawatts of panels, but the market will remain competitive as new factories push solar cell manufacturing capacity up 56 percent to more than 17GW, said DisplaySearch.
Sharp will embark on a major expansion of its production capacity next month when a state-of-the-art factory opens in Sakai, western Japan. The new plant will have an initial capacity of 480 megawatts and boost Sharp's production capacity by 62 percent from the current 770MW. The Sakai plant could eventually produce as much as 1GW of panels per year and become Sharp's largest single solar manufacturing base.
The factory will produce thin-film solar cells, one of the two main types of solar cell. Sharp built it in Sakai to benefit from manufacturing efficiencies that come from being located on the same site as the company's latest LCD panel plant. The two technologies and manufacturing processes share several similarities.
But the solar cell manufacturing industry remains a competitive and potentially volatile one. This was underlined in January when a plan to reduce solar subsidies in Germany, the largest consumer market in 2009, shook the market and led to predictions of rapid price declines later in 2010.
Sharp is looking to insulate itself from some of this volatility by searching out profits in areas beyond manufacturing.
"We are looking into new business areas, not just the production and sales of solar cells but the energy business as well," said Miyuki Nakayama, a spokeswoman for Sharp in Tokyo.
In 2008 it joined with Kansai Electric Power to build a 10MW solar generating plant alongside its Sakai plant and last year formed its first overseas deal with Italy's Enel. The two companies plan to build a string of solar electricity plants in Italy, Spain and France. The plants will use solar panels from a new factory in Italy that will be built by Sharp, Enel and STMicroelectronics. The European plants could eventually generate as much as 500MW of power.
Sharp is talking with other utility companies and corporations about similar ventures worldwide but Nakayama declined to disclose their identities.