SunPower and First Solar Adopt Opposite Business Strategies

SunPower Corp is giving up its manufacturing business to focus on rooftop solar panel installations. SunPower Corp is one of America’s largest solar panel makers.

The solar company is spinning off its solar panel production operations to a new solar company, Maxeon Solar. Maxeon Solar will be based in Singapore with factories in France, Malaysia, Mexico, and the Philippines. Included in the deal, a Chinese supplier of silicon wafers will make a $298 million equity investment, giving Maxeon a 1.03 billion dollar value.

SunPower Chief Executive Officer Tom Werner stated, “As the industry gets bigger, you get companies that specialize. It’s part of the mainstreaming of solar.”

The spin-off means that the U.S. will be losing a major solar panel maker. SunPower had won an exemption to the duties that were placed on the solar panels that it made overseas because of the premium, high-efficiency nature of its products.

SunPower said it will focus on residential and commercial solar panel installations. It’s already one of the biggest suppliers, competing against Sunrun inc., Vivint Solar Inc and Tesla Inc.’s energy unit. That market is expected to continue to grow after a California law that requires solar panels on most new houses takes effect in January, and Werner said he already has deals to supply 18 major home builders.

In the early days of solar energy, SunPower and First Solar both built and sold some of the biggest U.S. solar farms. That strategy was created in part by a need for the solar panel producers to create a market for their products.

But First Solar sees that edge in manufacturing. It rolled out its flagship Series 6 product and just started production its new $1 billion factories in Ohio. In September 2019, the solar company said that they were moving away from building power plants.

October 24, 2019, First Solar announces that it has retaken the crown of largest solar panel manufacturer in the U.S. and on the Western Hemisphere.  The company’s Ohio Factory began production three months ahead of schedule, bringing its U.S. Series 6 manufacturing capacity to 1.9 gigawatts and its global Series 6 capacity to 5.4 gigawatts.

All manufacturers are benefiting from the ongoing U.S. solar power boom, driven by continuing cost declines and increasing demand from projects racing to capture the value of the federal Investment Tax Credit for solar, which is set to decline at the end of this year.

The first solar has been reaping the rewards of this market growth along with its competitors. Last month, it landed a 1.7-gigawatt order to supply solar panel installations that are being developed by Intersect Power and are being built by Signal Energy in Texas and California. Deliveries are set to begin in late 2020 and end by 2021.

The solar company maintained its previous 2019 full-year guidance of 3.7 billion dollars to 3.9 billion dollars in revenue and $2.25 to $2.75 in earnings per share, and year-end net cash guidance of $1.7 billion $1.9 billion. But it increased its full-year operating income guidance and reduced its operating expense guidance, based on shifts in production startup costs among other factors.

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