The first half of 2024 has passed, and the photovoltaic (PV) industry has seen a competition of losses.

Among the first-tier manufacturers, Longi lost 5 billion yuan, Tongwei lost 3 billion yuan, Zhonghuan lost 3 billion yuan, and Jinko lost 1 billion yuan. The situation is even worse for second-tier manufacturers, with 8 PV companies being ST (Special Treatment), and ST Sunshine has already been delisted. Since the "827 new policy" last year tightened IPOs, PV companies that have not yet gone public have no hope of financing through listing to survive the winter.

However, "misfortune is where fortune lies," and the current pace of new PV installations has significantly slowed down. As prices in many segments fall below cost, more and more companies are either exiting or reducing production, accelerating the clearance of capacity. At the same time, leading companies such as Longi and Zhonghuan have successively raised the banner of price increases.

Cycles of ups and downs, through the harsh winter, the "spring" of the PV industry is approaching.

1. Suspension of production and reduction of output, key words for the PV industry in 2024

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Recently, media reports have stated that to address the current market supply and demand imbalance and overcapacity issues, the top ten domestic PV glass manufacturers held an emergency meeting and reached a consensus to collectively suspend production and reduce output by as much as 30%.

This news has been confirmed, and both Qianbin Group and Fuling have informed the media that the meeting did indeed take place, but it is uncertain whether the expected reduction in output can ultimately be achieved as each company's specific situation varies.

The reduction in glass production is a microcosm of the accelerated clearance of capacity across the entire PV industry chain. Suspension of production and reduction of output are the "key words" for China's PV industry in 2024.

According to Wang Bohua, the honorary chairman of the China Photovoltaic Industry Association, the number of projects that started construction, began work, or were planned in the first half of 2024 has decreased by more than 75% year-on-year, with over 20 projects announcing termination, suspension, or postponement. At the same time, the industry's operational rate is low, with some companies facing suspension of production. The operational rate in the polysilicon material segment is about 60%, and the operational rates for wafers, cells, and modules are between 50% and 60%.

The entire industry is suffering from severe losses, and many companies are actively or passively exiting the market.Recently, East China Heavy Machinery and Medi Technology, two listed companies that previously ventured into the photovoltaic industry, announced the termination of their photovoltaic business. According to an incomplete statistics by the Shanghai Securities News, by mid-August 2024, more than 20 listed companies that "crossed over to chase light" in previous years have fallen into delisting, bankruptcy, project termination, and debt litigation.

However, in the first half of 2024, China's new installed capacity once again set a historical record high. According to the National Energy Administration, in the first half of this year, China's new photovoltaic installed capacity was 102.48GW, a year-on-year increase of 30.68%.

It is worth noting that the growth rate has significantly slowed down. Previously, in the first half of 2023, China's new photovoltaic installed capacity increased by 154% year-on-year. The growth rate has dropped significantly from 154% to 30.68%.

2. Longi responds to the price increase of silicon wafers: Future prices will only go up!

In the view of industry leaders, the industry chain prices have already fallen to the bottom and can only rise.

Not long ago, at the Longi Green Energy mid-year performance briefing, the company's management stated that considering the current industry-wide cash cost losses, the future price of silicon wafers will only rise and not fall.

According to previous news, Longi officially announced the price increase of its silicon wafer products on August 29, and at the same time, companies such as TCL Zhonghuan also followed suit to raise the price of silicon wafers.

So, after the price of silicon wafers rises, will the improvement of the industry's profitability lead to the resumption of work that was originally reduced, hindering the clearance of capacity?

Longi Green Energy Chairman Zhong Bao Shen clearly stated that the current production scale of various companies will not increase due to price increases, and the suspended companies do not have the motivation to increase their work rate, because a small increase is not enough to support their work to earn profits.As the silicon wafer industry leaders form a group to raise prices, there are also signs of stabilization in other segments of the industry chain. For instance, in the solar cell sector, Jingang Photovoltaic has stated that the company primarily sources its silicon wafers from TCL Zhonghu. If the price of silicon wafers rises in the future, the company's solar cell prices will also be adjusted accordingly.

3. Integrated layout and advanced capacity are the "game-changers" through the cycle

At present, it appears that integration and new technologies are the high ground for the next round of competition in the photovoltaic industry. An integrated layout can lock in cost advantages, and technological innovation and planning for future advanced capacity are the keys to being fearless in the face of market cycle fluctuations.

This implies that companies like Tongwei Shares and Longi Green Energy have a competitive edge during cyclical fluctuations. Taking Tongwei Shares as an example, the company has laid out the four major segments within the photovoltaic industry: silicon materials, wafers, cells, and modules, which lays the foundation for the company to minimize costs to the greatest extent.

Tongwei Shares' financial reports indicate that the company's TNC cell non-silicon cost for 2023 has already been reduced to around 0.16 yuan/W, and in the first half of 2024, against the backdrop of a significant increase in international silver prices, it has been further reduced by 20% compared to the beginning of the year.

While the industry's capacity is being cleared, major leaders are still increasing their investment in advanced capacity. It is a common belief in the industry that advanced capacity will never be excessive. Xie Weipeng, President of GCL-Poly, believes that in the long run, under competitive conditions, outdated and high-cost capacities will gradually be eliminated, while leading technologies and high-quality capacities will lead market development and promote continuous iteration and upgrading of the photovoltaic industry. Advanced capacity will not be excessive; on the contrary, it will drive the reduction of costs and increase efficiency in photovoltaics, bringing greater stimulation to industry demand.According to insiders, in 2023, the market share of PERC cells could reach 29%, while the more advanced TOPCon only accounted for 24%. This year, however, the situation has reversed entirely, with PERC cells taking up only 20% of the market, and TOPCon surpassing 70%. It is projected that the demand for TOPCon will exceed 40 gigawatts in 2024.