US thin-film photovoltaic (PV) modules maker First Solar Inc (NASDAQ:FSLR) plans to shift from the current Series 4 production to Series 6 production over the course of 2017 and 2018, whilst cancelling its Series 5 product.
The company expects to have about 3 GW of Series 6 production capacity in 2019, it said in a statement on Wednesday. The Series 4 product, meanwhile, will be phased out.
First Solar unveiled its Series 5 module platform and plans for the larger Series 6 panels, still in concept development, earlier this year. The Series 5 product was planned with a rated capacity of 365-390 W, while the company said the Series 6 product was expected to exceed 400 W. The new roadmap shows that the Series 4 product will be upgraded to 122 W from 117 W, the Series 5 will be cancelled, and the Series 6 modules will have a rated capacity of over 420 W.
"Following the completion of an internal review process to evaluate the best competitive response to address the current challenging market conditions, we have developed plans that will enable us to more quickly begin production of our Series 6 module,” said CEO Mark Widmar, adding that the move requires restructuring of the company’s current operations.
Because of the transition, First Solar will be axing employees at its manufacturing plants both at home and abroad. It also plans additional reductions in administrative and other staff.
The whole process will lead to restructuring and asset impairment charges of USD 500 million to USD 700 million, including a cash impact of USD 70 million to USD 100 million. The larger portion of the charges, between USD 475 million and USD 585 million, will come from asset impairments related to Series 4, Series 5 and stored manufacturing equipment, and charges for termination of open purchase orders. Most of these are expected this year.
At the same time, First Solar also expects to incur USD 220 million to USD 250 million of tax expense this year associated with the distribution of between USD 700 million and USD 750 million of cash to the US from a foreign unit. This distribution will provide liquidity for the restructuring of local operations and Series 6 investment. The transfer is seen to result in a cash tax impact of USD 8 million to USD 10 million.
(USD 1.0 = EUR 0.933)
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First Solar's new roadmap. Source: First Solar Inc.
