Due to changes in the incentive programs announced by various governments, the solar industry experienced a stall in shipments in the first half of 2011. The stall in the market caused firms to lower capacity utilization rates. With growing inventory, the price of solar products across the supply chain fell like dominoes.

Despite the fact that total solar module shipments from Europe- and US-based solar firms in the first half of 2011 grew on year, profits shrunk significantly. As the price of solar products continue to fall, the price of modules have come to levels lower than the production costs for Europe- and US-based solar firms. This has caused firms such as Solon, Q-Cells, REC and SolarWorld to shut plants and lay off employees to adapt to market changes. Firms such as REC, Q-Cells, First Solar and SunPower have been shifting production focus to Southeast Asia in hope to lower costs.

Total shipments of PV inverters from major players in the first half of 2011 showed 25% on-year growth. Growth was also apparent in the shipments of each firm. However, the price of PV inverters was also falling, causing the gross margins of the firms to shrink on year. Another point worth noticing is the percentage of high-power PV inverters in total shipments has been increasing.

Compared with China-based vertically integrated solar firms, the Europe- and US-based solar firms tend to have higher production costs. Hence the latter firms have been shifting to the end market, solar PV systems, in hopes to have better control over demand and to increase shipments and gross margins. It remains to be seen whether this strategy will help the Europe- and US-based firms pay off growing bank debts.