Hemlock Semiconductor Corp., owned by Dow Corning Corp., is the top maker of polysilicon, followed by Wacker Chemie AG of Germany, OCI Co. Ltd. of South Korea and GCL Poly Energy Holdings Ltd. of China, according to Bloomberg industry data.

'Flying To Quality'

Investors and project developers are increasingly looking at cash and survivability of manufacturers, executives said.

"Customers are flying to quality," seeking suppliers who are considered reliable enough for banks to lend on projects, Suntech CEO Zhengrong Shi said last week. The top six manufacturers took 55 percent of the panel market in the second quarter, up from 26 percent last year, he said.

The Bloomberg Industry Global Leaders Large Solar Energy index has lost 59 percent this year, more than 10 times the 5.7 percent decline in the MSCI World Index. The Standard & Poor's 500 index has gained 0.3 percent in the period.

German solar-panel maker Q-Cells SE, whose 2012 convertible bond trading at a discount to face value of about 58 percent, has said it's open to takeover bids. Orkla ASA said on Sept. 14 it's looking for ways to exit from its 39.7 percent stake in Norwegian panel and polysilicon maker Renewable Energy Corp ASA.

Quick Innovation

Survivors will need strong technology, economies of scale and the ability to innovate quickly, "but also very strong financial performance, very healthy balance sheets," Gao said.

A ranking of 35 companies in the Bloomberg Global Leaders Large Solar Index shows Conergy AG, which makes panels in Germany, has the weakest balance sheet with a total debt exceeding total equity by more than tenfold, data compiled by Bloomberg show. LDK Solar and Canadian Solar also rank among the five most leveraged companies with short and long-term borrowings more than double shareholder equity.

The Chinese companies have a "huge" cost advantage over their European, American and Japanese competitors because of better operational management and an ability to react faster to market conditions, Gao said.

The spot price of solar panels has fallen about 40 percent this year as manufacturers particularly in China ramped up their production capacity, according to New Energy Finance. The 10 largest silicon panel manufacturers doubled their manufacturing capacity last year, the data show.

Operating Margins

Many solar-equipment companies are losing money at the operating level, as the average operating margin fell to 0.1 percent in the third quarter compared with 13.7 percent a year earlier, Bloomberg industry data show.