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Enphase announced a significant restructuring plan on Friday, cutting around 500 employees and contractors—approximately 17% of its workforce.
The move comes in response to declining demand for solar products across the U.S. and Europe, driven by a mix of rising interest rates and shifting energy policies.
Industry Headwinds Force a Strategic Shift
In a recent filing with the U.S. Securities and Exchange Commission, Enphase disclosed that the restructuring effort will involve ceasing contract manufacturing operations in Guadalajara, Mexico, and consolidating its focus on more cost-effective locations. The company plans to continue manufacturing microinverters in the U.S., India, and China, keeping its global capacity steady at 7.25 million units per quarter.
Enphase Energy is a NASDAQ-listed energy technology company headquartered in Fremont, California. Enphase designs and manufactures software-driven home energy solutions that span solar generation, home energy storage and web-based monitoring and control.
Notably, around 5 million units of that capacity will remain centered in the U.S.
This strategic pivot follows a challenging year for Enphase and the broader solar industry. CEO Badri Kothandaraman, in a letter to employees, highlighted that the downturn in residential solar installations in the U.S., compounded by policy adjustments in Europe, has created a volatile market. Many companies, including some major industry players, have faced cash flow difficulties, with several even filing for bankruptcy.
Financial Impact of Restructuring
Enphase expects to incur approximately $17 million to $20 million in restructuring and impairment costs, mostly impacting the fourth quarter of 2024. The company’s current operating expenses hover between $80 million and $85 million per quarter, but with the restructuring, it aims to reduce this figure to between $75 million and $80 million by the end of the first quarter of 2025.
A Broader Solar Industry Slowdown
The solar sector has been grappling with higher financing costs, which have dampened residential solar adoption in the U.S. Additionally, European markets have seen demand wane due to changes in subsidy programs and adjustments to utility rates. Analysts note that while the long-term outlook for solar remains positive, near-term challenges are forcing companies like Enphase to adapt rapidly.
As the company refocuses its operations, the restructuring is intended to align its resources with current market conditions, positioning Enphase for a potential recovery in the global solar market in the years to come. However, whether these measures will be sufficient to weather ongoing industry turbulence remains to be seen.
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