Encourage mergers and reorganizations in the photovoltaic industry

According to a recent update from the China Photovoltaic Industry Association (CPIA) official account, the association organized a "Photovoltaic Industry High-Quality Development Symposium" in Beijing. The meeting explicitly emphasized the need to intensify efforts to combat vicious competition through selling below cost prices, encourage industry consolidation and restructuring, and facilitate market exit mechanisms.

Since last year, prices along the photovoltaic supply chain have been continuously declining, highlighting the issue of outdated production capacity. Data released by the Silicon Branch of the China Nonferrous Metals Industry Association on May 15th showed that the prices of polycrystalline silicon have surpassed the cash costs of all producing enterprises.

From my perspective, the current challenges facing the photovoltaic industry can be analyzed from two aspects.

On the one hand, many diversified photovoltaic enterprises have encountered development bottlenecks. Some lag behind in technological advancements, while others suffer from significant financial losses. Under the influence of market dynamics, it's noteworthy that the initial casualties are often the diversified enterprises. This situation underscores the importance of adopting innovative technologies and streamlining operations to remain competitive in producing solar panels and pv modules.

Furthermore, with the ongoing price decline along the photovoltaic supply chain, there's increased pressure on companies to deliver both cheap solar panels and the best solar panels in terms of efficiency and quality. This necessitates a strategic approach towards optimizing production processes and reducing costs without compromising on product performance. Custom solar panels tailored to specific market demands could offer a competitive edge amidst the industry's challenges, but achieving this requires robust research and development efforts.

In summary, the photovoltaic industry is at a critical juncture, necessitating a concerted effort to address issues of competition, technological innovation, and cost optimization to ensure sustainable growth and development.

Two years ago, during the peak of the photovoltaic industry, various capital sources were attracted, including those from diversified sectors aiming to capitalize on the booming demand for products along the supply chain. Some of these diversified enterprises also reaped benefits from the industry boom. However, with the continuous expansion of production capacity, as the market entered an oversupply phase, diversified enterprises lacking in technological expertise and financial strength faced the risk of project failures, leading to the elimination of outdated production capacity. This year alone, multiple diversified enterprises have announced the termination of their photovoltaic projects. For example, ST Lingda plans to terminate its investment in the construction of a 20GW high-efficiency photovoltaic cell production base in Tongling.

On the other hand, several once-prominent photovoltaic listed companies are now on the brink of delisting.

As of May 23rd, amidst an overall uptrend in the photovoltaic sector, ST Aikang halted trading with its share price falling to 0.86 yuan per share; ST Yangguang's share price has been continuously declining for 14 consecutive trading days, reaching 0.74 yuan per share, remaining below 1 yuan per share for 6 consecutive trading days.

The predicament faced by ST Aikang and ST Yangguang is not unique in the photovoltaic industry. As of now, 7 A-share photovoltaic enterprises are in dire straits.

From the perspective of the development situation in the photovoltaic industry, the encouragement of consolidation and restructuring by the China Photovoltaic Industry Association provides a strategic direction for the industry's high-quality development. This signifies that after experiencing several cycles of development, the photovoltaic industry has once again entered a critical period of survival of the fittest. The transition from rapid expansion to gradual adjustment in the photovoltaic industry makes the elimination of certain enterprises an inevitable trend.

The symposium also mentioned that the photovoltaic industry is highly market-oriented and thus should primarily address its current challenges through market mechanisms. However, it also emphasized the importance of leveraging government interventions effectively.

In my view, through consolidation and restructuring, industry resources will gradually concentrate on leading enterprises. Simultaneously, leading enterprises, by integrating resources, can expand their scale, enhance market competitiveness, and better cope with market changes and competitive pressures. Furthermore, the elimination of outdated production capacity in the photovoltaic industry, reliant on low-price strategies to capture market share, has squeezed industry profit margins, disrupted market order, and consolidation and restructuring can help optimize resource allocation, improve production capacity utilization, reduce ineffective competition, and further alleviate industry challenges.