First Solar Expanding Capacity - Analyst Blog

First Solar Inc. (FSLR) announced its intent to double the capacity of its German manufacturing plant in Frankfurt (Oder), Germany , which will create several hundred new jobs in the process. 

First Solar already employs more than 600 associates in its Frankfurt manufacturing plant. The company is in advanced stages of discussion with the German regional and federal authorities to obtain the necessary regulatory permits and financial framework for the expansion. 

The expansion would be the first major foreign direct investment in the German green technology sector in fiscal 2010. It would double the annual capacity of the Frankfurt manufacturing plant to around 446 megawatts (MW) by the fourth quarter of 2011 from the current capacity of 223 MW. 

First Solar is expanding its presence in Germany with a focus on enlarging its European customer base. The expansion would also help the company increase its natural hedge against euro/dollar exchange rate risk by producing more in Germany to meet the European customer demand.
 
First Solar employs more than 4,700 associates worldwide. With an expected annual production capacity in excess of 1.3 gigawatts (GW) in Germany, the United States and Malaysia in 2010, First Solar is one of the world's leading producers of photovoltaic modules. The company has three additional factories under construction in France and Malaysia. When the announced factories become fully operative in 2012, the company will have more than 2.1 GW of capacity, based on the annualized run rate for the first quarter of 2010. 

Based in Phoenix, Arizona, First Solar designs, manufactures and sells solar electric power modules using a proprietary thin film semiconductor technology. The company's solar modules employ a thin layer of cadmium telluride semiconductor material to convert sunlight into electricity. 

First Solar enjoys a distinct cost advantage over its peers due its reliance on low cost thin-film cells. However, the advantage is ebbing fast due to falling polysilicon prices. First Solar’s growth potential and that of the solar industry on the whole requires a prudent long-term focus on technological enhancements, capacity build-out and cost minimization. Balancing all the three aspects would be a tedious task. 

Competition in the industry is becoming tougher by the day for U.S. solar players such as First Solar, who have a huge German exposure in their top line compared to its counterparts such as, Suntech Power Holdings Company Ltd. (STP), SunPower Corporation (SPWRA) and ReneSola Ltd. (SOL) whose markets are more diversified. 

We currently have a market Neutral recommendation on the Zacks Rank #3 ('Hold') First Solar stock.
Read the full analyst report on "FSLR"
Read the full analyst report on "STP"
Read the full analyst report on "SPWRA"
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