Solar Giant Suntech to Expand Through Acquisition of Japan's MSK

China Watch Home About China Watch

China’s solar giant Suntech Power Co. Ltd. announced on August 2 that it was acquiring the Japanese photovoltaic (PV) company MSK. This is Suntech’s first overseas acquisition, and the move will enable the company to expand its business in Japan, one of the world’s biggest PV markets.

The acquisition will occur in two stages. In the first stage, to be completed by the third quarter of this year, Suntech will buy two-thirds of MSK shares for US $107 million. The company will then purchase the remaining shares by the end of 2007, with an estimated investment of between $53 million and $193 million, depending on MSK’s financial performance at the time of purchase. The entire acquisition will cost Suntech $160–300 million, according to Shanghai Oriental Morning Post.

MSK is one of Asia’s largest manufacturers of PV modules, with over 20 years of experience in the industry. Boasting a production capacity of roughly 200 megawatts in 2005, the company occupies about 10 percent of the Japanese PV market. MSK is also a leading manufacturer of Building Integrated Photovoltaic (BIPV) systems (solar electric systems that integrate PV panels into a building's roof or façade) and has a strong research team.

The acquisition will enable Suntech to break into the rapidly growing BIPV market and to strengthen its management and marketing by utilizing MSK’s expertise and existing global sales layout. As a Suntech subsidiary, MSK will enjoy the Chinese company’s strength in PV solar panel manufacture and distribution channels, as well as reduced cost benefits.

Global demand for solar PV systems has been growing at over 40 percent annually for the past decade, due mainly to government policy incentives in Europe and the United States. Suntech has rapidly expanded its market share in Europe, yet until now has failed to break into the Japanese market, which has seen one of the fastest increases in solar panel installation and manufacture.

A week ago before the acquisition occurred, Suntech also signed an agreement with MEMC Electronic Materials, Inc., a leading U.S. solar wafer manufacturer, to ensure the supply of solar-grade silicon wafers over a 10-year period. Shipments will begin in the first quarter of 2007 with pre-determined pricing on a take-or-pay basis, and the deal will cost Suntech between $5 billion and $6 billion.

Suntech’s new market expansion through the acquisition of MSK, coupled with a steady supply of wafers, will significantly ease the company’s efforts to secure a leading role in the global solar marketplace.