Tongwei and LONGi, two major manufacturers of high-purity silicon and monocrystalline silicon wafers, reported significant losses in the first half of 2024. Tongwei’s losses were in the range of 3 to 3.3 billion yuan, while LONGi recorded losses between 4.8 and 5.5 billion yuan during the same period.
These losses are notable considering the significant market share these companies hold in the solar panel supply chain. Tongwei accounted for over one-fourth of the global market share for high-purity polysilicon in 2022 and 13 percent of global solar cell production for six consecutive years. Similarly, LONGi controlled nearly 19 percent of the global module production market in 2023.
The solar manufacturing industry, particularly in China, shows a trend of consolidation. A report from the International Energy Agency in 2022 revealed that China’s dominance in all stages of solar panel manufacturing exceeds 80 percent.
Even within China, production is concentrated in a few key provinces, such as Xinjiang. One factory in Xinjiang alone accounted for 14 percent of global polysilicon production in 2021.
The primary challenges faced by LONGi and Tongwei include low prices for solar equipment caused by supply chain concentration. Both companies attributed their losses to overcapacity and declining prices.
Price drops were significant across various components in the industry, with polysilicon and wafer prices falling by 15 percent in 2024. These challenges not only affect larger companies like Tongwei and LONGi but also pose a threat to smaller manufacturers and potential investors in the PV supply chain market.
The concentration of PV supply chains in one country, particularly in China, raises concerns about energy security and market stability. Any disruptions in manufacturing due to local crises could lead to higher downstream prices for consumers.
Chinese regulators are taking steps to address overcapacity in the solar manufacturing sector by limiting capacity expansions and encouraging research and development initiatives. These actions signal a growing awareness of the challenges faced by the industry and the need for measures to stabilize the market.