CORRECTED-UPDATE 2-Sunpower to idle Philippines production lines, cut 900 jobs (Oct 16)
(Corrects paragraphs one and rewrites paragraph six to say the company cut 15 percent of its global workforce, not 17 percent)
* Most of the job cuts in Philippines
* To incur restructuring charge of $10 mln-$17 mln
Oct 16 (Reuters) - SunPower Corp said it will idle some solar cell production lines in the Philippines and cut about 900 jobs, or 15 p e rcent of its global workforce, as overcapacity continues to cast a shadow on solar equipment makers.
The solar panel industry has been hit by excess capacity and waning demand with top consumer Europe cutting back subsidies for green power. Prices have tumbled about 30 percent this year, virtually erasing profits across the industry.
SunPower said on Tuesday that it will temporarily idle half of the 12 lines at its 330 megawatt Fab 2 cell manufacturing plant and 20 percent of its panel manufacturing in the Philippines.
The company, majority-owned by French oil company Total SA , closed a plant in the Philippines earlier this year and streamlined its manufacturing processes at its other two plants in the country.
Sunpower said most of the 900 job cuts would be in the Philippines. It did not specify where the other job cuts would occur.
The company said in a regulatory filing on Tuesday that the cuts represent about 15 percent of its global workforce, but did not update its latest employee count. As of Jan. 1, the company had about 5,220 employees worldwide, of which 4,130 were located in the Philippines.
Solar companies are looking to cut costs in view of dwindling margins. American and European companies also face stiff competition from Chinese rivals, who are being investigated for exporting below-cost products.
Sunpower said it was looking at producing its lowest-cost solar panels for less than 75 cents per watt, on an efficiency adjusted basis, by the end of 2012.
"Top-tier Chinese companies are on the cusp of making modules for 60 cents per watt and less," Raymond James analyst Pavel Molchanov wrote in an e-mail to Reuters.
"Of course SunPower has higher conversion efficiency and therefore charges a premium, but there is a limit to how high that premium can be," he said.
A number of solar companies have begun to cut production, but analysts say more cuts are needed to balance supply and demand.
Suntech Power Holdings Co Ltd, the No.1 solar panel maker, slashed production capacity last month, while First Solar Inc cut output of its thin-film solar panels earlier this year. A number of other players have been operating their plants at reduced rates.
"Industry wide production capacity exceeds global demand by roughly two times, so much more rationalization is needed," said analyst Molchanov.
He said production cuts were needed particularly in China, which accounts for over half of the world's panel production.
California-based Sunpower expects to record a restructuring charge of $10 million to $17 million, most of which will be in the fourth quarter. More than 90 percent of these charges will be cash.
Sunpower shares, which have fallen 47 percent in the last 12 months, were nearly flat at $4.69 on Tuesday on the Nasdaq. (Reporting by Swetha Gopinath and Neha Alawadhi in Bangalore; Editing by David Cowell and Don Sebastian)
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