U.S. tariffs cast a cloud over Huawei's solar electronics launch

(Reuters) - Huawei Technology Co’s coming U.S. launch of a solar-panel control device is expected to collide with new Trump administration tariffs on Chinese electronics, undermining a product that analysts had seen as challenging rivals on pricing.

FILE PHOTO: People walk past a Huawei sign at CES (Consumer Electronics Show) Asia 2018 in Shanghai, China June 14, 2018. REUTERS/Aly Song/File Photo

The Chinese company, best known for its smart phones and telecommunications equipment, has developed a new generation of low-cost solar inverters, which convert, manage and monitor energy produced by solar panels for home use.

Huawei has said it was aiming to roll out the product, called FusionHome, in the United States before the end of the summer, a year after its original target. Analysts and distributors had expected it to knock $100-$200 off current market prices of similar devices costing between $1,000 and $1,500 per household.

But a coming 25 percent tariff on Chinese electronics that would overturn much of Huawei’s expected price advantage may have stalled talks with U.S. installers and distributors, said analysts and research firms.

Huawei will either have to reduce its margins or raise prices, they said, potentially benefiting rival producers including SolarEdge and Enphase Energy, which are ramping up manufacturing outside China.

Huawei declined to comment on tariffs and did not respond to detailed questions from Reuters on the current status of FusionHome.

Company spokesman Joe Kelly said in July that the company was planning to introduce the new product to its partners in the United States this summer and that the timing of the roll-out would depend on those distributors.

The 25 percent tariff, if implemented, will take effect Aug. 23, and analysts covering the sector say it will affect the new Huawei product.

“It certainly would eat into profits and is just a question on how aggressive Huawei wants to be,” said Cowen & Co analyst Jeffrey Osborne.

Huawei’s foray into the high-margin residential market comes after panel installations fell in 2017 for the first time in seven years. GTM Research recently cut its forecast for 2018 residential solar market installations by 8 percent to 2.2 gigawatts.

Of four major solar panel makers Reuters talked to, only Utah-based Vivint Solar confirmed it was considering adding Huawei’s inverter to its lineup.

SunPower Corp and Tesla’s SolarCity did not respond to Reuters’ requests for comment. A SunRun spokeswoman said the company welcomed new innovations that made solar energy cheaper and more accessible.

“A 25 percent tariff could eat up the margins of cost-competitive Chinese manufacturers and potentially change the player landscape of the U.S. solar inverter market,” said another analyst, Iben Frimann-Dahl from Rystad Energy.

Reporting by John Benny in Bengaluru; Editing by Cynthia Osterman

(Original source)