Supplies of semiconductor chips are likely to remain scarce at least through the end of 2022 when some new capacity is expected to come online, SolarEdge Technologies Inc. CFO Ronen Faier said.
The chip shortage has emerged as a key obstacle for SolarEdge as the components manufacturer tries to meet booming demand in the global solar market, Faier said at an investor conference June 7.
"I can say that we do see that things are relatively stable, which is not necessarily good," Faier said. "It's limiting our growth in many senses."
Tight supplies of semiconductors are affecting companies across the economy, from smartphone-makers to auto manufacturers. In January, Intel Corp. said it is investing more than $20 billion in two new chip factories in Ohio to boost production to meet growing demand.
"I think that, today, we're in a relatively strange situation where our growth is more dependent on the ability to get semiconductor chips than getting demand for our products," Faier said.
"[There] is so much of an over-demand that we are not able to fulfill orders in some cases," Faier added.
Demand is likely to accelerate, the CFO said, after President Joe Biden said June 6 that he will try to ease uncertainty in the U.S. solar market by delaying potential tariffs from a federal trade probe.
SolarEdge, which focuses on the residential and commercial solar markets, is opening a plant in Mexico to serve the U.S. market. Once the factory is up and running, SolarEdge expects that about 10% of the products it ships to the U.S. will be subject to tariffs on Chinese imports by year-end, down from 32% in the first quarter, Faier said.
"[The] biggest relief that will happen is that the shipment costs that are so expensive today to bring things from Vietnam and from Europe and from Israel to the United States are going to be relieved with local shipping that is a little bit cheaper than ocean freight," Faier said.
SolarEdge reported record revenues in the first quarter on strong demand from Europe, where countries are trying to overhaul their energy systems following Russia's invasion of Ukraine.
As of June 7, the company's stock price was up 9.2% in 2022 compared to a decline of 22.2% in the Nasdaq Composite Index.
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