The Photovoltaic Industry Faces a Complex 'Rashomon' Dilemma in Production Capacity

On one hand, there's capacity control, while on the other, there's large-scale procurement.

It's no secret that the current anti-involutionary sentiment in the photovoltaic industry is particularly intense. Just recently, during the National Day and Mid-Autumn Festival, the Photovoltaic Industry Association held a three-day meeting in Beijing. This confidential anti-involutionary meeting sparked widespread discussion among industry insiders and sparked speculation about future changes in the photovoltaic industry landscape.

Although the Photovoltaic Industry Association urgently clarified that this was a "monthly meeting," industry insiders are still buzzing about the meeting, with public discussion generally focusing on two key areas: production capacity and pricing.

These two issues are recurring topics. Back in August of this year, a photovoltaic industry symposium jointly organized by the Ministry of Industry and Information Technology and six other departments focused on four key measures: strengthening capacity regulation and eliminating outdated production capacity, combating low-price competition, standardizing product quality standards, and promoting industry self-regulation. This was the second high-level photovoltaic conference since the one held on July 3rd. Participation expanded from enterprises to include state-owned power generation companies, aiming to systematically address issues such as overcapacity and price wars in the industry. Recently, several industry insiders have stated that a document strengthening photovoltaic production capacity regulation may be issued soon.

Furthermore, multiple media outlets have reported that the long-planned polysilicon "stockpiling" platform company is expected to officially launch this month, aiming to guide the orderly withdrawal of excess capacity through market-based means.

Preliminary estimates indicate that once operational, the platform could drive the withdrawal of up to millions of tons of polysilicon production capacity. Based on the industry's rumored compensation rate of approximately 600 million yuan per 10,000 tons, the total investment involved in this capacity optimization is expected to exceed 60 billion yuan.

Although no official response has been received to this news, the photovoltaic industry is indeed actively combating internal competition.

Calls for photovoltaic production limits and resistance to low-price competition have persisted, but market feedback suggests little success.

This time, photovoltaic companies' lavish investment of 760 million yuan to purchase photovoltaic cell production equipment appears to be somewhat counterproductive given the broader market trend, demonstrating that the industry continues to ramp up new production capacity.

With equipment manufacturers facing mixed fortunes, how can photovoltaic production capacity be controlled?

Compared to last year, overall profits for photovoltaic equipment manufacturers have declined significantly this year. In the first half of the year, 12 listed core photovoltaic equipment companies generated combined revenue of 34.814 billion yuan and net profit attributable to parent companies of 4.436 billion yuan. Many leading manufacturers are facing significant profit pressure, with dramatic declines.

For example, Jingsheng Mechanical & Electrical, one of the leading equipment manufacturers, achieved operating revenue of 5.799 billion yuan in the first half of the year, a year-on-year decrease of 42.85%. Net profit attributable to parent companies was only 639 million yuan, a 69.52% year-on-year plunge. The root cause of this profit decline is the cyclical adjustment of the photovoltaic industry, which has led to a year-on-year decline in revenue and profits for photovoltaic equipment and materials.

ATW’s net profit reached 760 million yuan in the first half of last year. However, this year's net profit attributable to parent companies plummeted to 308 million yuan in the first half of the year, a 59.54% year-on-year drop. The sharp decline in orders from the photovoltaic industry is a major factor in its profit decline.

Meanwhile, some photovoltaic equipment manufacturers have still achieved significant performance growth. According to Shenzhen S.C semi-annual report, revenue reached 8.372 billion yuan, a year-on-year increase of 26.41%, while net profit attributable to parent company shareholders soared to 1.83 billion yuan, a year-on-year increase of 49.26%.

Dr Laser also saw significant performance growth in the first half of this year. In the first half, Dr Laser's revenue reached 1.170 billion yuan, a year-on-year increase of 29.20%, and its net profit attributable to parent company shareholders reached 327 million yuan, a year-on-year increase of 38.37%. Specifically, the company's independently developed laser micro-etching technology for BC batteries has successfully replaced traditional photolithography processes, significantly improving both efficiency and equipment investment costs for customers.

This shows that capacity expansion within the industry continues, but the photovoltaic industry is currently experiencing a clear polarization. Although senior management has repeatedly stated the need to eliminate outdated production capacity, how to define outdated capacity and whether corresponding manufacturing standards will be introduced in the future remain uncertain.