Norwegian solar panel maker REC says it has decided to temporarily take out about 35% of its production capacity due to a "challenging market situation" and low demand visibility, adding that the move will affect about 180 employees.

REC, listed on the Olso Bors, said it was continuously evaluating the market situation and would prepare for a fast start-up process when the market outlook became more predictable.

"We have seen an increasingly difficult market so far this year and need to take measures to optimise our capacity utilisation and secure flexibility in regards to timing of product deliveries," REC said.

"Although we temporarily take out a part of our capacity, we follow the market development closely and are making sure that we stay prepared to increase production on short notice," said spokesperson Ingelise Arntsen.

Not prepared to update output or financial guidance

REC said it would not change its output or financial guidance going forward.

"As the timing of a restart is yet undecided, REC Wafer is presently not prepared to indicate the expected effect of the temporary reduction in capacity utilisation on the overall annual production of wafers in 2009," it said in a statement.

"While it also is too early to quantify the financial consequences for REC Wafer, it should be noted that continued production at full capacity would have required external purchases of polysilicon at spot prices that are higher than the price levels in the long-term polysilicon supply contracts."

The group repeated its previous statement that REC's polysilicon production was expected to increase when commercial production from the new Silicon III resumes in the third quarter 2009.