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Cypress Semiconductor Corporation Message Board

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  • floppy_6 floppy_6 Jan 6, 2006 6:11 PM Flag

    Piper- SPWR initiated with Outperform

    SPWR's technology has two edges:

    1) Energy conversion ratio 21% - industrial highest.
    2) Low, efficient use of Ploysilicon material to make solar - 9.2 g/watt.

    1) This advantage may not be so sustainable. Although it is higher than most other crystailline average - 15%. When I read STP prospectus, they indicated that they have successfully reached 19% on Oct. 2005, 4% higher than the previous efficiency. If you check out CEO's credential of this Chinese co., it makes you wonder whether it is not too difficult to improve. Just a guts feeling.

    2) Only ESLR claims that they can achieve 8 g per watt efficiency. STP claimed that they lower the dosage on polysilicon by using a thinner memberane but without any number to claim the efficiency. ESLR claimed that 8g/watt is 35% below industry average. So SPWR is about 20% below industry average. Since polysilicon is about 50% of COGs, this efficiency is meaningul. But when you compare against ENER who do not use polysilicon at all, instead they use a-Si, then comparison is lost.

    One other issue - manufacturing efficiency. Q-Cell and STP had been in business for 3-4 years, respectively will have capacities of 350 MW and 240 MW by the end of 2006. SPWR is expected to have 100 MW by that time. Q-cell and STP are already running at 32% gross margin with 12-15% operating margin. I think it may take a few years for SPWR to reach there. Q-cell and STP made 34c and 19c in most recent quarter. Q-Cell is a germany stock. STP is ADR at here.

    Good luck

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