First Solar, a U.S.-based vertically integrated solar developer and thin-film module manufacturer, has announced restructuring efforts, including plans to scrap its Series 5 modules, skip to producing its Series 6 platform, and cut more than 25% of its workforce globally.
Although the company originally planned to start transitioning to production of its new Series 5 modules, First Solar says it is now canceling its Series 5 product and instead accelerating Series 6 production into 2018, with approximately 3 GW of Series 6 production expected in 2019. The company says that over the course of 2017 and 2018, its existing production facilities, including plants in Ohio and Malaysia, will be converted to Series 6 production. Furthermore, the company’s current Series 4 product will be phased out.
“The acceleration of the Series 6 roadmap is an important development for First Solar,” says Mark Widmar, CEO of First Solar, in a company announcement. “Following the completion of an internal review process to evaluate the best competitive response to address the current challenging market conditions, we have developed plans that will enable us to more quickly begin production of our Series 6 module. Although the decision to accelerate our Series 6 roadmap requires a restructuring of our current operations, we expect the transition to Series 6 will enable us to maximize the intrinsic cost advantage of CdTe thin-film technology versus crystalline silicon. Recent steep module pricing declines require us to evaluate all components of our cost structure and streamline our business model to best position the company for long-term success.”
At over 420 W each, the large-area Series 6 modules will offer more power than their predecessors, and according to a company presentation, they will be about 40% cheaper to manufacture than the current Series 4.
As part of these initiatives, First Solar says it will substantially reduce its workforce at its domestic and international manufacturing facilities. These actions, combined with additional reductions in administrative and other staff, are expected to reduce First Solar’s workforce by approximately 1,600 workers, or 27% of its approximately 6,000 global headcount, according to a company filing.
The company says it expects to incur restructuring and asset impairment charges of $500 million to $700 million, which includes a cash impact of $70 million to $100 million. The charges are anticipated primarily in 2016.
In its presentation, the company lists several current market challenges that spurred its decision, including decreased demand, especially in the Chinese market; a drop in global module prices; and aggressive power purchase agreement prices, among others. Several other solar industry players, including SunPower and Enphase Energy, previously cited similar reasons for their own plans to streamline operations.