On November 16, 2016, First Solar (FSLR) announced an update on its Series 6 product transition and revised its fiscal 2016 guidance. The company also provided guidance for fiscal 2017. In this series, we’ll discuss the company’s Series 6 product roadmap as well as its fiscal 2016 and fiscal 2017 guidance. We’ll analyze how accelerating the Series 6 product impacted First Solar’s operations.
Product transition update
Fist Solar decided to accelerate its Series 6 product as the best competitive response to existing market conditions. The decision will accelerate the company’s Series 6 product production into 2018—compared to its previous announcement about producing the product in 2019. To fast track its Series 6 production, First Solar decided to phase out the production of its Series 4 product over the course of the next two years. It also suspended the plan to produce its Series 5 product.
First Solar’s Series 6 product advantage
Instead of going for greenfield factories, First Solar intends to use the existing manufacturing facilities to develop its Series 6 product. It will reduce the company’s capital expenditure and risk profile. It will also bring its Series 6 product online quicker.
According to the company’s filings, the manufacturing cost per watt of First Solar’s Series 6 product is expected to be 40% lower than its Series 4 product and the core manufacturing cost per watt of its Series 5 product. With higher conversion efficiency, the Series 6 product is expected to generate an incremental average selling price per watt of $0.06—compared to the company’s Series 4 product.
Pricing pressure and power purchasing agreements continue to impact upstream solar (TAN) companies’ margins such as First Solar, Canadian (CSIQ), Trina Solar (TSL), and SunPower (SPWR). The launch of First Solar’s Series 6 product is expected to have a positive impact on the company’s gross margins in this competitive environment.
In the next part of this series, we’ll look at the roadmap of First Solar’s Series 6 product. We’ll analyze how it impacts the company’s operational expenditure.