Due to the wait-and-see attitude towards the Italian market, the sudden slowdown in system installations and the slower than expected growth in other major European markets led to a sharp increase in the inventory level of the entire supply chain. In the first half of 2011, the inventory levels of manufacturers, distributors, integrators and installers all increased.
Most of this inventory record has been shipped out by component manufacturers and placed in distribution and sales channels. IMS Research expects that suppliers have already shipped nearly 8 GW of components, but these components have not yet been installed on the grid.
“In 2010, all the products in the entire supply chain were circulated smoothly, and channel inventory was usually only 4-5 GW, which is equivalent to a quarter of production. Generally speaking, a component needs three months to be shipped before being installed. Transport and through various distribution channels, so this figure seems to be reasonable," said photovoltaic research analyst Sam Wilkinson. "Many insiders think that the current inventory level is shocking. In fact, it is only about 3 to 4 GW more than the 'normal level'."
In early 2011, in addition to the high channel inventory of components, suppliers’ inventory was also rapidly increasing; most suppliers stated that the latest production this year has far exceeded shipments. The increased inventory of components in the hands of suppliers has resulted in a total inventory of photovoltaic modules exceeding 10 GW.
IMS Research predicts that the further decline in the average price of PV modules will lead to a strong recovery of the photovoltaic market, especially in Germany and the United States; high inventory levels will begin to decline in the third quarter of 2011.
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