Cover Story: Chinese Solar Giants’Shine Fades Amid Growing Product Glut

Price war triggered by overexpansion and weak demand produces first-half losses

China’s solar panel makers are suffering plunging valuations amid mounting losses as a price war triggered by overcapacity and weak demand takes a toll.

The industry, encouraged by government subsidies and policies aimed at limiting carbon emissions, embarked on rapid expansion in recent years to grab nearly 95% of global production capacity. However, that aggressive expansion strategy is now backfiring.

Major Chinese photovoltaic (PV) manufacturers reporting first-half results last week posted significant losses in reversal of year-earlier profits. Longi Green Energy Technology Co. Ltd., China’s largest solar wafer producer, reported a net loss of 5.2 billion yuan ($733 million) for the first six months of 2024, compared to a 9.2 billion-yuan net profit a year earlier. Rival TCL Zhonghuan Renewable Energy Technology Co. Ltd. posted a net loss of over 3 billion yuan, a sharp reversal from the 4.5 billion yuan profit recorded a year ago. The few companies that remained profitable saw their margins shrink.

The imbalance of supply and demand as a result of overexpansion has driven prices below manufacturing costs, causing operational difficulties across the sector, Longi said in its earnings report.