Analysis: Solar trade war promises order bonanza for Taiwan

By Swetha Gopinath and Clare Jim, Reuters

BUSINESS has been booming for Taiwanese solar companies since they became the middlemen in a trade war between the United States, China and Europe over the multi-billion dollar solar power equipment market.

Green Energy Technology Inc <3519.TW>, which makes wafers used in solar cells, is receiving so many orders from Chinese firms seeking to circumvent U.S. import duties that the company is considering renting extra capacity.

If, as expected, the European Union also introduces punitive tariffs on Chinese-made solar equipment, Taiwanese companies may inch back toward profitability after posting losses for at least the last six quarters.

"There could be short-term investment opportunities in Taiwanese solar stocks," said Edward Guinness, co-portfolio manager at Guinness Atkinson Asset Management.

A supply glut and a sharp drop in demand from Europe, the No. 1 solar market, have led to a 75 percent decline in panel prices since 2008. European and U.S. manufacturers have accused Chinese competitors of flooding the market with low-cost panels.

For Taiwan, the story gained momentum in November.

This is when the U.S. International Trade Commission approved double- and triple-digit duties on imports of some Chinese solar products for the next five years, in a case filed by SolarWorld Industries America.

The tariffs, considerably higher than preliminary duties approved in March and May, have effectively halted deliveries to the United States of panels that use Chinese-made cells.

China, however, is not ready to quit a market that bought $3.1 billion worth of its solar cells and panels in 2011.

To circumvent the duties, mainland Chinese panel makers are outsourcing cell manufacturing to Taiwan even as their own cell production lines lie unused  to make panels that can be sold to the United States.

Although Beijing claims Taiwan as its own, the island is considered to be an independent entity in trade issues.

Glenn Gu, a China-based analyst for business information provider IHS, said Chinese solar panel suppliers cornered as much as 55 percent of the 4-gigawatt (GW) U.S. market in 2012. About 90 percent of these panels used cells made in Taiwan.

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