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) -- Shipments of solar inverters reached 7.3 gigawatts (GW) in the third quarter, another record quarter for inverter shipments as demand in the global photovoltaic market continued unabated.

In the second quarter 2010, global solar inverter shipments of 5 GW were also a record for the industry.

The record numbers for solar inverter shipments have stoked fears that 2010 is "as good as it gets" for companies in the sector. U.S. solar inverter company



has been the poster-child for the bear thesis on the solar inverter market. Power-One has ridden the solar demand in 2010 to new stock highs and massive earnings beats. However, Power-One's most recent earnings beat was met with a big selloff as investors feared that the opportunity for the company had peaked.

>>Power-One: 5 Keys to the Selloff

Inverter companies reported $2 billion in revenues in the third quarter, according to IMS Research.

London-based IMS Research said in a research report that the majority of solar inverter shipments were for installations in Germany, but growth was slowing in solar's largest market in the third quarter. The demand pull-in in Germany ahead of feed-in tariff cuts in July was massive. Solar installations in Germany in June were above 2 GW, and have since declined. The most recent reported monthly numbers from Germany indicated an installation level of 492 megawatts in September.

The recent decline in German demand, ahead of the typically slow first quarter for solar installations in Europe, has been one of the factors contributing to a recent selloff in solar stocks across the board. However, solar bulls contend that the slowdown in Germany in the third quarter is proof positive that the feed-in tariff cuts are working and that there won't be a hard cap put in place in Germany next year. Meanwhile, the pickup in markets like Italy will offset the pull back in Germany.

Italy and Asia were picking up the slack for the inverter companies in the third quarter, according to IMS Research, as German demand slowed. Solar inverter shipments into European markets, ex-Germany, have grown by 300% this year, according to IMS>

The EMEA region accounted for around 80% of inverter shipments in the third quarter, which was down from 90% in the previous quarter. The U.S. and Ontario, Canada, are expected to be much bigger markets in 2011, though Ontario will remain a relatively small player in terms of overall size. IMS Research did find in its third quarter report that high growth in the Americas market was a driver in terms of global inverter shipments, and it's estimated to have doubled in size from the same period last year.

IMS Research analyst Tom Haddon stated in the third-quarter inverter wrap, "The fourth quarter is likely to be a much weaker quarter, as Germany, the largest market, continues to slow. Additionally, significant inventory now exists in the supply chain and a sharp correction seems inevitable."

The trend in the third quarter was for higher inverter shipments across companies but declining market share.

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IMS Research noted that German inverter giant

SMA Solar

had another record quarter for shipments in the third quarter but lost market share. A central tenet of the Power-One bull story is that even if overall demand comes under pressure from increasing inverter supply, it continues to take share from SMA Solar.

With Power-One heavily focused on the European market and just shifting some of its focus to North America for 2011, some solar inverter bets are being placed on



, which is tied to the U.S. large-scale solar project market. IMS Research noted in its new inverter report that SatCon was one of the standout performers in the third quarter, increasing its share in both the Americas and global market.

-- Written by Eric Rosenbaum from New York.


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