The Chinese photovoltaic (PV) industry is currently facing a challenging period, with leading players across the supply chain reporting combined losses exceeding RMB 10 billion in the first half of 2026. This industry-wide struggle is a stark contrast to the emerging signs of recovery and long-term growth on the horizon.
Industry Challenges and Divergence
The PV sector is grappling with a complex web of issues. Outdated, low-efficiency capacity is being phased out, but the supply-demand mismatch persists, keeping prices low and margins under pressure. Leading module manufacturers, like JA Solar and LONGi Green, are facing operational hurdles due to tax burdens, trade barriers, and logistical disruptions.
What makes this particularly fascinating is the industry's structural divergence. While some top-tier players, such as TCL Zhonghuan and Aiko, are narrowing their deficits through cost optimization and product upgrades, others, like Trina Solar, are showing signs of recovery through strategic market positioning and diversified business models.
Structural Differentiation and Recovery Signals
One key differentiator driving profit gaps is the adoption of high-efficiency BC back-contact technology. LONGi Green, for instance, has increased its overseas sales of BC modules. Equipment suppliers like DR Laser project a significant ramp-up in BC cell capacity this year, which could help rebalance the industry's supply-demand dynamics.
Personally, I think this technology shift is a game-changer. It not only improves efficiency but also positions early adopters to achieve profitability sooner, especially in high-value markets. This technological advancement could be a catalyst for industry-wide recovery.
Auxiliary Material Segment's Profit Growth
Amid the industry's adjustment phase, the auxiliary material segment, particularly PV encapsulation film suppliers like First Applied Material, is leading the way in profit growth. Rising PV resin feedstock prices have boosted their earnings, and the diversification into new businesses, such as PCB dry-film photoresist, is providing a second growth driver.
This segment's success highlights the importance of diversification and innovation in a challenging market. It's a strategy that many leading PV manufacturers are also adopting, aiming to mitigate trade and geopolitical risks.
Long-Term Strategies and Outlook
Despite the current challenges, the industry is not sitting idle. Leading manufacturers are implementing clear medium- to long-term strategies. For example, Tongwei and JA Solar are focusing on cost reduction, efficiency improvement, and global expansion. TCL Zhonghuan and Flat Group are investing in high-efficiency BC capacity upgrades to gain a competitive edge.
In my opinion, the industry's ability to adapt and innovate will be crucial for its long-term survival and growth. The enforcement of national safety and energy-efficiency standards, as mentioned by Drinda New Energy Technology, could further accelerate the exit of outdated capacity, paving the way for a more sustainable and efficient PV industry in China.
Conclusion
The Chinese PV industry is at a crossroads, facing significant losses but also showing signs of structural recovery and long-term growth potential. The key to success lies in technological differentiation, strategic market positioning, and a resilient approach to navigating trade and geopolitical challenges. As the industry continues to evolve, it will be interesting to see how these leading players adapt and thrive in a rapidly changing landscape.
