Hazy Skies Forecast for Cypress' SunPower

Analyst Doug Freedman with American Technology Research posits that any disruptions caused in SunPower's supply chain "is a high-class problem that will only offer longer-term investors a discount to own of the strongest brands in the solar industry," according to a recent research note. Freedman has no disclosures related to SunPower or Cypress.

SunPower said in its IPO registration filing with the Securities and Exchange Commission that it had adequate arrangements for polysilicon through the rest of this year, but that an industrywide shortage of poly is expected to continue for the foreseeable future. "Since we have committed to significantly increase our manufacturing output, an inadequate allocation of polysilicon would harm us more than it would harm our competitors." (A SunPower spokeswoman said she was unable to comment about information contained within the company's registration statement due to SEC rules.)

That risk is partly because SunPower's primary competitors rank among the world's largest corporations. Even though SunPower claims competitive advantages in manufacturing, aesthetics and efficiency, its competitors are substantial: Mitsubishi, Sanyo, Sharp and BP Solar, a unit of British Petroleum(BP).

While the silicon solar market has shown signs of sustainable and robust growth, players in this sector could find themselves victims of their own success. SunPower's potential has carried Cypress' stock 30% higher this year, but investors shouldn't discard the potential impact of supply shortages.

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