Gintech Evaluates Mergers, May Relocate Plant on U.S. Tariff

Gintech Energy Corp., a Taiwanese solar cell maker facing export restrictions following the introduction of U.S. tariffs, is looking for opportunities to merge with competitors, clients or suppliers amid excess industry capacity.

Overcapacity is making it difficult for smaller companies to compete on pricing and the quality of their products, Taipei-based Gintech’s chief financial officer, Lay Lay Pan, said in an interview on Feb. 6.

“We need presence in supply chains besides our core operations in solar cells,” Pan said.

Gintech’s Taiwan competitors -- Motech Industries Inc. and Neo Solar Power Corp. -- have already struck deals of their own. Motech announced in December it would buy Topcell Solar International Co. for NT$2.06 billion ($65 million) to cut costs and boost production scale. Neo Solar in 2013 acquired DelSolar, a unit of Delta Electronics.

New U.S. tariffs went into effect on Jan. 21 for solar panels imported from China and Taiwan. Ruling that the U.S. makers were being harmed by the imported products, the International Trade Commission imposed anti-dumping duties ranging from 11.45 percent to 27.55 percent on Taiwanese producers, according to the Commerce Department.

Gintech fell 0.7 percent to close at NT$21.50 in Taipei. The stock has declined 7.4 percent this year, compared with the 1.2 percent gain in the benchmark Taiex index.

Pan said Gintech’s plants were running at full capacity in December and January after the company reduced plant utilization in August and September, even as the U.S. duties came into effect.

Relocating Facilities

“High industry production utilization rates in the fourth quarter may have reflected ongoing demand in China and shipments bound for the U.S. before the final trade ruling announced in January,” said James Evans, a London-based analyst at Bloomberg Intelligence.

The company is weighing relocating some production facilities outside of Taiwan, potentially to southeast Asia, Pan said in response to the U.S. ruling.

The move may allow continued tariff-free access to the U.S. market, said Evans, and follows moves by Solartech Energy Corp. and Tainergy Tech Co. to Malaysia and Vietnam.

Demand for solar panels is expected to be 50 to 55 gigawatts this year, compared with 40 to 45 gigawatts in 2014, Pan said, with the bright spots being the U.S. and China. Gintech won’t be expanding its solar cell production capacity, as snow season in Japan and the U.S. will keep product prices under pressure in the first quarter, Pan said.

Weakening global demand hurt solar component prices, bringing module prices to the lowest in more than five years on weak demand, according to PV Insights on Feb. 4.

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