On Monday, Suntech Power, based in the eastern Chinese city of Wuxi near Shanghai, said its fourth-quarter profit fell from a year earlier even as revenue more than doubled.
It blamed a 50 percent jump in the price of silicon, the main ingredient in solar panels used to generate electricity, and forecast further rises of 15 to 20 percent in 2006.
Meanwhile, the company said it would only be able to raise average selling prices of its products by 5 to 7 percent.
"Only solar companies with contracts can grow, and only those with fixed-price contracts can maintain margins," Piper Jaffray analysts Jesse Pichel and Ming Yang wrote in a research note about the company.
"Longer term, we prefer companies that can reduce or eliminate polysilicon usage per watt until poly becomes more abundant in 2008," they said.
Concern over the soaring price of silicon, the main ingredient in solar panels as well as computer chips, also drove down shares in other companies linked to the industry. |
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