General Sector-Specific Conditions

Market researchers at Gartner expect a semiconductor recovery in 2010. They foresee global silicon-wafer demand (by surface area sold) climbing a good 23%, thereby returning to the 2008 level. Gartner forecasts a further increase of about 9% in 2011. According to the experts, sales revenue for semiconductor silicon wafers will grow too – namely by a good 22% in 2010 and around 12% in 2011.

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WACKER’s Key Customer Sectors

 

 

Sectors

 

Influence of global economic crisis

 

Trend 2010/2011

 

 

 

 

 

Construction

 

Significant decline

 

Growth in Asia

Photovoltaic

 

Growth

 

Continued strong growth, but cyclical

Semiconductor

 

Significant decline

 

Recovery, though still extremely cyclical market

Energy/electrical

 

Slight decline

 

Growth

Chemical

 

Significant decline

 

Recovery

The EPIA (European Photovoltaic Industry Association) predicts strong photovoltaic-market growth for both 2010 and 2011. Newly installed photovoltaic capacity should rise from 6.8 gigawatt (GW) in 2009 to 10.8 GW in 2010 and to 13.8 GW in 2011. The EPIA expects particularly marked growth rates in the USA. For the first time, newly installed photovoltaic capacity in 2010 could be higher there than in Germany. From 2011, the EPIA estimates that newly installed photovoltaic capacity in China, too, will expand considerably – to 600 MW. Polysilicon output will continue to grow over the next few years, since WACKER and other manufacturers are expanding their production capacities. In 2010, global polysilicon output is set to rise to over 100,000 metric tons, which could lead to overcapacities in the market.

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Installation of New PV Capacity in 2010 and 2011

 

 

 

 

 

 

 

 

Installation of New
PV Capacity (MW)

 

CAGR1
10-11

 

 

2011

 

2010

 

%

 

Sources: European Photovoltaic Industry Association (EPIA), Global Market Outlook for Photovoltaics until 2013.

1

CAGR: compound annual growth rate

 

 

 

 

 

 

 

Germany

 

3,200

 

2,800

 

14

Spain

 

600

 

500

 

20

Other European countries

 

3,310

 

2,190

 

51

USA

 

3,400

 

3,000

 

13

Japan

 

1,200

 

1,000

 

20

Asia

 

1,300

 

700

 

86

Other regions

 

800

 

600

 

33

Total

 

13,810

 

10,790

 

28



Worldwide, the chemical industry will see sales and production figures grow in 2010 compared to 2009, though the recovery will be slow. According to the German Chemical Industry Association (VCI), German chemical production will increase 5%, and total sector sales around 6%. Capacity utilization will nevertheless remain unsatisfactory. The VCI anticipates major opportunities for chemicals in emerging economies. China and India, in particular, will see demand rise in key sectors during the coming years. WACKER prepared for this trend early on and will further expand its production capacities over the next two years, particularly in China.

The global construction industry should experience a moderate recovery in 2010 according to Global Insight (a market research institute), whose forecast matches WACKER POLYMERS’ expectations. Worldwide, Global Insight predicts 0.4% growth for construction in 2010. The market will then see stronger growth in 2011. The main momentum here comes from infrastructure projects fueled by government stimulus programs and by countries’ infrastructure investment needs. Regionally, growth in India and China will be particularly strong – and both WACKER POLYMERS and WACKER SILICONES intend to profit from it. 2009 saw these divisions opening their own technical competence center in India. WACKER already has two such centers in China. Since our Nanjing site came on stream in 2009, we have been able to supply the region’s customers with dispersions and dispersible polymer powder directly from China. Worldwide, Global Insight expects the construction industry to grow 2.2% on average by 2013.

Regional Construction-Industry Growth 2008 – 2013 p.a. Regional Construction-Industry Growth 2008 – 2013 p.a. (bar chart)
Source: Global Insight

The German Electrical and Electronic Manufacturers’ Association (ZVEI) expects the country’s electrical and electronics industry to recover in 2010. It forecasts production growth of 6%. In the long term, growth and pent-up demand in many emerging markets will be the electronics sector’s key drivers worldwide. The Asian electronics industry anticipates a slow upturn in 2010. China, Japan, Taiwan and South Korea predict production gains for their electrical and electronics sectors.

Positioning of the Group for the Next Two Years

As reported earlier, WACKER optimized and revised its strategies for WACKER SILICONES and Siltronic in 2009. Effective January 1, 2010, WACKER FINE CHEMICALS strengthened its focus on biotechnology. The division has changed its name to WACKER BIOSOLUTIONS.

WACKER FINE CHEMICALS with New Focus and Name

On January 14, 2010, WACKER announced that it would close its Kempten site during 2011. The Group produces pyrogenic silica there. The closure is part of our structural measures (announced earlier) at WACKER SILICONES. We intend to transfer Kempten’s production volumes to Burghausen and Nünchritz, optimizing capacity utilization at these sites’ high-volume facilities. The planned closure has led to impairments on fixed assets of €3.5 million and to a €5.5 million provision. WACKER has recognized both amounts in its consolidated financial statements for 2009.

We currently do not foresee any other major changes in business policies and organizational orientation. We assume that our international business will reflect the trend of past years and gain in importance, leading us to expand our production, sales and service network.