Taiwan-based solar cell makers are now quoting between US$1.2-1.25/W, down from US$1.3/W about two weeks ago, according to industry sources. US$1.2/W would be the lowest price since early-2010 after the subprime economic crisis and some consider it the right level to stimulate demand in the European markets, which will see further government incentive cuts in 2011.

The end-use market in Europe has cooled off substantially in the second half of 2010, especially recently during the holiday snow season. With more production capacity going online since the fourth quarter and bringing up supply, Taiwan's solar cell makers will feel more price pressure.

Solar cell quotes in November were about US$1.4-1.42/W, and in December alone, quotes have fallen 10-15%. Solar cell maker Gintech Energy previously announced that it would drop quotes by 5-10% in December, but some thought the projection excessive at the time.

China-based solar cell makers, which typically are more competitive in pricing, are expected to soon follow suit. The vertically integrated solar companies are quoting at US$1.25/W for the first quarter of 2011, but they may now need to readjust pricing to match their Taiwanese counterparts.