One of First Solar's (FSLR 0.42%) greatest strengths is its backlog of future solar panel sales and project developments. As of Oct. 25, the company had 11,300 megawatts (MW) of systems and third-party sales booked, or a year and a half of demand for its 7,400 MW of capacity.

Most of that backlog is in the U.S., where First Solar has benefited from the fact that it wasn't hit with tariffs that every major competitor now pays. That's allowed it to book billions in future sales in the U.S., but now investors should start worrying that First Solar is too reliant on the U.S. for the long term. 

Large solar farm in the desert.

Image source: First Solar.

The pipeline is North America heavy

In its third-quarter earnings report, First Solar reported 11,300 MW of booked future sales, which is most of its production over the next two years. But the pipeline behind those bookings consists of 6,700 MW of potential North America sales compared to just 1,200 MW of pipeline outside of North America.\

The pipeline in the U.S. is predictably strong given the company's advantage over imported solar panels that are hit with a tariff. Even though commodity solar panel prices have fallen about 30% in 2018, a 30% tariff means the end cost to customers in the U.S. is about flat with a year ago. But low demand outside of the U.S. has to be a concern. 

International solar is big business

Outside of the U.S., First Solar doesn't have the same tariff advantage, and the drop in commodity solar panel prices is hurting demand. We're seeing that with the small backlog. 

It shouldn't be understated how important international markets are for solar manufacturers. Out of 85,200 MW of solar expected to be installed in 2018, according to GTM Research, 74,300 MW, or 87%, is outside of the U.S. That's a big market to miss out on.

Where First Solar sits internationally could also give us a view of what a post-tariff world will look like for First Solar in the U.S. Tariffs are set to sunset gradually over the next four years, falling to zero in 2022. When that happens, First Solar will have to compete head to head with Asian commodity suppliers in the U.S. and abroad. If it isn't winning business in international markets today, will it win business in the U.S. after 2022? 

Another question for First Solar

First Solar has an artificial tariff advantage in the U.S. that it has exploited extremely well over the last few years. But competitors are winning a vast majority of the business internationally, where First Solar isn't protected. The fact that there's only a pipeline of 1,200 MW of sales outside of North America when that's where a vast majority of solar is being built is concerning for the solar industry's biggest company.