German solar PV equipment manufacturer Manz AG has terminated its contract with China's Chongqing Shenhua Thin Film Solar Technology regarding supply of its machines for the latter's CIGSfab, and also decided to exit the solar manufacturing business altogether.
Manz CEO Martin Drasch said his company won't be undertaking any further technological developments in CIGS thin-film solar technology and has discontinued market development. The news comes in the midst of growing clamor for European solar manufacturing.
"We very much regret that we were unable to reach an amicable solution with our Chinese contractual partner. We will now consistently focus our efforts on the implementation of our growth strategy in the automotive & electromobility, battery manufacturing, electronics, energy, and medical technology industries, added Drasch.
In the heydays of solar manufacturing in Europe over a decade ago Manz had been a prominent solar equipment producer, which later expanded into storage equipment and focussed in solar mainly on copper indium gallium selenide (CIGS) thin film solar cell production equipment after taking over the CIGS thin-film innovation line of Würth Solar in 2011. Few years later, in 2017, it signed a contract in China to deliver a CIGS production line for 350 MW capacity. Manz says to date it has received only €175 million out of €218 million contract value from the latter despite having provided services worth €198 million as the Chinese company kept delaying the order over the years.
Since the duo could not reach any mutually agreeable decision, Manz said it will take up the matter legally.
The German company has made a non-cash impairment of €23.2 million on the same asset as a result. Also, the management has adjusted 2022 business forecast to reflect the impact on earnings development due to the China contract, and 'against the backdrop of the unexpectedly strong increase in raw material and energy costs, a changed project mix, ongoing challenges in the global supply chains, and increased economic uncertainties' among its customers.
Previously, Manz had expected its 2022 revenues to increase in the mid double digit percentage range on annual basis with EBITDA margin in mid to upper positive single-digit percentage. The guidance did not include the completion of its CIGSfab contract with the Chinese partner (see 2021 Preliminary Financial Results From Manz).
Once considered a very promising solar technology among thin films due to its highest efficiencies among its peers, the big hopes in CIGS have not materialized. Only few companies are still working in this field. In a related news from another European CIGS thin film solar manufacturer, Switzerland's Flisom AG is to be taken over with majority stake by German investment company Marna Beteiligungen AG. Flisom has a 40 MW production facility in Hungary that's been operational since 2020 rolling out ultra-light CIGS thin-film solar modules on flexible plastic film using its roll-to-roll manufacturing technology. Flisom is a spin-off from the Swiss Federal Institute of Technology Zurich (ETH).