UPDATE 2-INTERVIEW-Kyocera wary of bubble in solar sector

*Expects 80 percent of solar sector makers to fail

*Expects large price falls ahead for solar panels

*Aims to achieve grid parity in 5 or 6 years (Adds details)

By Mayumi Negishi and Kentaro Hamada

KYOTO, Japan, Sept 29 (Reuters) - The solar power sector is in a bubble, and 80 percent of companies in the industry could fail when prices of solar panels fall below the cost of making them, the head of Kyocera's solar operations said on Monday.

Compared to rivals, the world's No.4 solar cell maker has been wary of expanding solar panel production, waiting for technology advances to lower the cost of converting solar power into electricity, managing executive officer Tatsumi Maeda said.

Kyocera, which trails Germany's Q-Cells (QCEG.DE), domestic rival Sharp Corp (6753.T) and China's Suntech Power Holdings Co Ltd (STP.N), was the first to mass-produce polysilicon solar cells in 1982.

But it now faces growing price competition from rivals, who have announced aggressive spending plans, pushing up the price of silicon, which is used to make most solar cells on the market.

"This is a bubble," Maeda told Reuters in an interview, referring to the estimated 200 solar power firms now in the sector and their plans to ramp up capacity.