Is Suntech too big a Chinese brand to fail?
On March 15, the cash-strapped solar company—until recently the world’s biggest photovoltaic panel maker—faces a $541 million payment on convertible notes, a quarter of the $2 billion in debt it has incurred.
Whether Suntech can strike a deal with its bondholders or secure a government bailout will set the stage for the collapse or consolidation of the Chinese solar industry. Other photovoltaic giants, including Trina Solar and JA Solar, also face crushing debt and overcapacity—a result of a rapid expansion of manufacturing that sent solar panel prices plummeting and allowed China to dominate the global market.
Given that Suntech founder Zhengrong Shi became famous as China’s one-time billionaire Sun King, it’s tempting to draw Shakespearian allusions as March 15 approaches – the Ides of March and all. Except that the Suntech board dispatched this solar Caesar on Monday, replacing him as executive chairman seven months after he stepped down as chief executive. But he’s not going, quietly or otherwise. Shi issued a statement yesterday decrying his removal as “invalid and of no effect.”
The boardroom brawl may cheer US and European competitors that successfully brought trade cases against Chinese companies that resulted in the imposition of tariffs. But the bankruptcy of Suntech or other major Chinese module makers could prove disastrous to solar installers in the US and Europe that have seen their business boom as solar panel prices have fallen 75% in recent years.