I had reported that the third party multicrystalline supply arrangement at SunPower was essentially a new development and had not been previously announced. Other media sources had said that this was a "secretive" arrangement or insinuated that SunPower was not able to sell off their standard high-efficiency offering. That is incorrect.
The third-party information was actually announced in SunPower's Q4 quarterly earnings report -- as was emphatically pointed out in a phone call with SunPower VP Julie Blunden on Monday afternoon.
Blunden said that the reason for this third-party manufacturing arrangement was simple: "We have more demand than supply," and SunPower "does not begin ramping Fab 3 until later this year."
From the transcript of the earnings call:
"We will continue to capitalize on our investment in the outbound channel to leverage third-party supply and accelerate 2010 growth. The use of third-party panels is an established strategy for us and an integral part of our flexible model."
SunPower CEO Tom Werner replied to an analyst's question as follows:
"...we will sell this year a reasonably significant amount of third-party modules. In fact, it would make us one of the largest customers for some of the other module producers...We will do that in a unique way, however. It will not simply be buying a module. We will be adding our intellectual capital, so to speak, to the process, the configuration of the model, the testing, things of that nature, and we will do that because of our brand position...we need to make sure it's consistent with our brand position."
Blunden said that SunPower had multiple suppliers of cells but declined to specify a supplier.
As a vertically integrated supplier in a challenging market with a higher-than-average cost structure, SunPower needs to be creative. Their enhanced third-party module strategy and their contract manufacturing strategy are potentially viable paths to staying competitive in this market.
Normally, when SunPower introduces a new product, they put their PR machine in overdrive and journalists get assaulted by press releases, briefings and conference calls. So it's a little surprising that SunPower has quietly unveiled a new product.
Yes, the leader in high-efficiency solar panels, the world-record holder for commercial-scale solar panel efficiency has released its newest product.
Drum roll, please...
It's a polycrystalline-based panel, known as the Serengeti Series, with a 13.9-percent conversion efficiency. Rimshot.
A new product line, essentially a new direction for the company, somewhat counter to its technology-centric branding message -- and this news was not announced in recent press briefings or press conferences with the governor?
The panels appear to be intended for commercial applications. SunPower has a relationship with Q-Cells, so the cells might be sourced from that German vendor. SunPower also has a relationship with contract manufacturer Jabil and a recently announced CM arrangement with Flextronics.
According to Auriga, an investment firm, "SunPower is using third-party suppliers for the cells and is using outsourced contract manufacturing to assemble the modules; the modules are branded by SunPower. We believe this is a measured reaction to the loss of market share due to increased competition from both Chinese and Japanese module manufacturers. In addition, we believe the use of multi-crystalline modules weakens SunPower’s competitive argument that the company’s high-efficiency mono-crystalline modules can compete effectively versus the lower-priced Asian modules. We continue to rate the shares of SPWRA with a Sell rating and find the stock is meaningfully over-valued given the use of non-GAAP results." In addition, Auriga surmised that "this product offering will cause further margin compression on SunPower’s margin structure given that we find no premium in offering a standardized module."
In what would appear to the conspiracy-minded to be a diversionary tactic, SunPower just announced their 19.5-percent-efficient high output E19 series of solar panels.
The usually responsive SunPower PR organization has not yet responded to inquiries.