This is an excerpt from an article I originally published on Seeking Alpha on December 15, 2011. Click here to read the entire piece.)
On December 2nd, the U.S. and China got another step closer to a trade war over solar energy. In “China Rejects U.S. Panel Ruling That Solar Imports Harm Industry“, Bloomberg reported that China denounced the decision of the U.S. International Trade Commission to launch a full investigation into industry claims that China is dumping solar panels in the U.S. market. {snip}
In “China concerned over US ruling on solar panel probe” on Dec 4, the China Daily quotes a thinly veiled threat from China’s Ministry of Commerce (MOC)… {snip}
Momentum is building toward a trade war in solar energy between China and the U.S. U.S. companies that export to China will likely be the biggest losers in this battle. For example, GT Advanced Technologies (GTAT) reported in its Q2 investor financial summary on Nov 8 that 86% of its Q2FY12 $218M in revenue came from Asia. This compares to 98% in the previous quarter… {snip}
The threat of tariffs and a trade war did not appear anywhere in GTAT’s last earnings report. I highly suspect it will be front and center in the next earnings report. Until further clarity appears on this issue, I am assuming that a trade war is a material risk for GTAT. GTAT has accumulated a massive backlog of equipment orders, but the company continues to maintain that these orders are secure… {snip}
For reference, I provide below my notes from the Q&A portion of the conference call… {snip}
Source: FreeStockCharts.com
Be careful out there!
This is an excerpt from an article I originally published on Seeking Alpha on December 15, 2011. Click here to read the entire piece.)
Full disclosure: long GTAT