First Solar to exit Vietnam

Brandon Mitchener, First Solar director of communications, last week told VIR the company was selling its factory in Ho Chi Minh City’s Dong Nam Industrial Park. In February 2012, the American company completed an evaluation and approved a set of manufacturing capacity and other initiatives primarily intended to adjust its previously planned manufacturing capacity expansions and global manufacturing footprint.

“Due to supply-demand imbalances in the world solar market, regrettably the First Solar plant in Dong Nam Industrial Zone will be postponed until the market demand requires the additional capacity,” said Tymen De Jong, senior vice president of Manufacturing for First Solar.

After deciding not to proceed with its previously announced four-line plant in Vietnam and all necessary construction was completed in April this year, First Solar attempted to sell the plant.
Sales agent Cushman & Wakefield is seeking buyers for the 113,000 square metre manufacturing facility, including 107,000sqm of industrial space divided into two production areas, a large logistics area and 6,000sqm of external office building.

The company’s quarterly report  revealed in May 2012 that the Vietnam plant was classified as “assets held for sale” in the condensed consolidated balance sheet. According to the report, as of March 31, 2012, an impairment charge of $92.2 million was levied for the plant. Of which, an impairment charge in the three months ended in March 31, 2012 was $29 million.

Also, according to the report, the carrying amount of the Vietnam plant as of March 31, 2012 was $46.2 million. “The carrying amount of the Vietnam plant represents the fair value of the plant less expected costs to sell,” said the report.

The quarterly report also stated: “We expect to complete the sale of the Vietnam plant within the next 12 months, but the expected selling price is substantially below our cost of construction and there can be no guarantee that such sale will be completed in the next 12 months”.

First Solar has also decided to postpone the commissioning of its previously announced four-line plant in Mesa, Arizona and the construction of their previously announced two-line plant in France until such time as global supply and demand dynamics support the additional manufacturing capacity.

The primary goal of these initiatives is to better align production capacity and geographic location of such capacity with expected geographic market requirements and demand, the company said.