OSAKA -- Panasonic is considering ending production of silicon wafers used in solar panels as early as this fiscal year to focus its resources on solar power cells amid an increasingly tough business climate.
The Osaka-based company until now handled the entire solar panel production process in part to accumulate technological know-how. But outsourcing production has become more cost-effective given technological improvements and price competitiveness attained by material makers.
The solar panel manufacturing process begins with producing silicon ingots, which are sliced into wafers. A circuit is formed on the wafer's surface to create cells that are then linked together to build a solar panel.
At the end of next month, Panasonic will end ingot production at a plant in the U.S. state of Oregon. Its Malaysia plant, which takes those ingots to make into wafers, will no longer mass-produce the material and will produce solely for research use.
Ending material production will enable Panasonic to free up business resources that can be diverted to cell production. The company's cells offer top-notch efficiency in power generation, owing to its proprietary design that uses two different types of silicon. Starting next month, Panasonic will jointly produce cells with Tesla Motors in Buffalo, New York.
Japan's solar panel market has been shrinking as the government has slashed purchase prices, and competition is growing from Chinese producers, whose operations dwarf Panasonic's.
The Japanese company aims to boost output at its plant by supplying cells to solar panel makers in such countries as China and India. But it remains to be seen whether the company can strike deals with buyers large enough to purchase the majority of its Japanese output capacity.
Panasonic's solar battery business grew rapidly as it rode on the tailwinds of the Japanese government's feed-in tariff for solar energy. The company rose to top market share in Japan for household solar panels. Meanwhile, its global market share apparently did not even reach 1% last year.