May 16, 2011. The price of solar cells, the main component of photovoltaic panels, dropped in May as additional supply hit the market and demand was curbed by European cuts to solar power subsidies. Monocrystalline cell prices slumped 7.5 percent to $1.14 per watt from the previous month and multicrystalline cells were down 8.7 percent at $1.09 per watt. With the spot price of the raw material polysilicon posting a smaller decline of 5.1 percent to $74.4 per kilo, many cell manufacturers have seen their profit margins wiped out. The squeeze on margins may force smaller producers out of business or to seek a takeover from a bigger rival. Evergreen Solar Inc. said it may run out of cash unless it can find more investment and restructure its debts after sales slumped 55 percent in the first quarter. Spectrawatt Inc., the cell maker backed by Goldman Sachs Group Inc., last month closed its Hopewell Junction, New York, plant, laying off 117 workers. China's JA Solar Holdings Co. and Suntech Power Holdings Co., the world's biggest solar-panel manufacturers, are leading an expansion by a number of producers that together will add at least 9.5 gigawatts of new manufacturing lines this year, raising global capacity to 41.5 gigawatts compared with demand of no more than 28 gigawatts. German Chancellor Angel Merkel said Germany may have to consider additional cuts to its subsidized solar tariff, which swallows half the country's financial support for alternative energy. Italy this month passed a law which will progressively lower subsidies through the end of next year.