In the first half of 2024, among the four major segments of the photovoltaic industry (silicon materials, silicon wafers, cells, and modules), only 4 out of 20 leading companies achieved profitability, with a total profit of 3.05 billion yuan. In contrast, the remaining 16 companies reported cumulative losses amounting to 22.65 billion yuan.

Among the 16 companies with losses, Longi Green Energy suffered the highest loss of 5.243 billion yuan. TCL Zhonghuan and Tongwei Co., Ltd. incurred losses of approximately 3 to 3.1 billion yuan each. Aiko Solar reported a loss of 1.745 billion yuan, GCL-Poly Energy lost 1.48 billion yuan, Shuangliang Eco-Energy faced a loss of 1.26 billion yuan, and Hongyuan Green Energy lost 1.16 billion yuan. Of the 4 profitable companies, Canadian Solar and JinkoSolar reported the highest net profits, both around 1.2 billion yuan. Trina Solar achieved a net profit of 526 million yuan, and Hareon Solar made 80 million yuan.

Sun Tzu China Executive Search noted that, aside from the significant losses in the core segments of silicon materials, wafers, cells, and modules, most companies in the inverter, photovoltaic auxiliary materials, and photovoltaic processing equipment sectors remained profitable, with some even showing substantial increases in net profit.

The two once most profitable photovoltaic giants incurred a total loss of 8.372 billion yuan in the first half of 2024. Last year, these two leading companies had a combined profit of 22.448 billion yuan. This year, Longi Green Energy’s revenue decreased by 40.41% year-on-year, resulting in a net loss of 5.243 billion yuan, compared to a profit of 9.178 billion yuan in the same period last year. Tongwei Co., Ltd.’s revenue also fell by 40.87% year-on-year, with net profit plunging from 13.27 billion yuan last year to a loss of 3.129 billion yuan.

The photovoltaic industry is entering a downcycle, with larger companies being more significantly affected. Tongwei Co., Ltd. stated that the expansion of photovoltaic operations could not offset the impact of sharp declines in product prices, leading to decreased revenue and profitability pressures. Meanwhile, Longi Green Energy faced continued declines in industry chain prices and inventory impairments, resulting in an asset impairment provision of 5.784 billion yuan in the first half of the year, including 4.87 billion yuan for inventory and 859 million yuan for fixed assets.

JinkoSolar maintained its leading industry position in the first half of 2024, achieving a revenue of 47.251 billion yuan and a net profit of 1.2 billion yuan despite overall industry pressure. The company strengthened its market position with its N-type TOPCon technology and balanced global market presence. In the first half of the year, JinkoSolar shipped 35.9 GW of N-type modules, accounting for over 80% of its total shipments, consolidating its market share.

While major photovoltaic industry chain companies are experiencing losses, the inverter and auxiliary materials sectors remain profitable.

Recently, several inverter companies released their semi-annual reports. Sungrow Power reported a revenue of 31.02 billion yuan, up 8.38% year-on-year, with a net profit attributable to the parent company of 4.959 billion yuan, up 13.89% year-on-year.

Although the overall performance seems stable, Sungrow Power’s operating data reveals three significant changes: a slowdown in growth, a decline in energy storage business, and reduced overseas revenue.

Industry insiders analyze that Sungrow Power faces fierce competition in the overseas market, weakening its previous first-mover advantage and causing a decline in the market price of products like inverters, which may lead to a lower proportion of overseas revenue. Additionally, the company’s financial expenses increased by 160.93% year-on-year to 188 million yuan due to international trade friction and exchange rate fluctuations.

In the secondary market, despite a significant rise followed by a decline in Sungrow Power’s stock price, it still holds the top position in the A-share photovoltaic industry in terms of market value.

In the photovoltaic auxiliary materials sector, of the 18 related A-share listed companies, 11 achieved revenue growth in the first half of the year, 7 companies recorded positive net profit growth, and only 4 companies reported losses.

Foster and FLAT are the two leading companies in this field. In the first half of 2024, Foster’s revenue reached 10.764 billion yuan, up 1.39% year-on-year, with a net profit of 928 million yuan, up 4.95%. FLAT achieved a revenue of 10.696 billion yuan, up 10.51% year-on-year, with a net profit of 1.499 billion yuan, up 38.14% year-on-year.

Foster is a leading global supplier of photovoltaic backsheet films, with its product shipments consistently ranking first globally. In the first half of the year, the company’s photovoltaic backsheet film sales volume reached 13.89064 million square meters, up 43.61% year-on-year, with a revenue increase of 3.79%. FLAT’s main product is photovoltaic glass, which contributed 90.31% of its total revenue in the first half of the year. The company attributed its performance growth to the release of new photovoltaic glass production capacity, driving an increase in sales volume.

However, the overall weakness in the photovoltaic industry impacts auxiliary material companies differently. For instance, Haiyou New Material, also in the photovoltaic backsheet film sector, saw a decline in both revenue and net profit in the first half of the year. Similarly, Eurochina Technology, which provides quartz crucibles, silicon material cleaning services, and cutting fluid treatment for the photovoltaic industry, also experienced declines in both revenue and profit in the first half of the year.

Reasons for the success of auxiliary materials and equipment vendors amid the photovoltaic industry’s “overcapacity” and “price war”:

1. Technological Iteration and Capacity Expansion: Advances in photovoltaic technology, such as TOPCon and HJT, have increased demand for auxiliary materials and equipment. Equipment suppliers benefit from the expansion of various segments in the photovoltaic industry chain, leading to growth in scale and performance.
2. Stable Market Demand: Despite price declines in the photovoltaic main industry chain, the demand for auxiliary materials and equipment, as essential components in photovoltaic product production, remains relatively stable with less impact from price fluctuations.
3. Cost Control and Product Differentiation: Auxiliary materials and equipment suppliers maintain high gross and net profit margins through cost control and product differentiation strategies, thus sustaining good profitability.
4. Policy Support and Market Outlook: Growing global demand for renewable energy, particularly in China, along with increasing policy support for the photovoltaic industry, provides a broad market outlook for auxiliary materials and equipment suppliers.
5. Supply Chain Management: Effective supply chain management helps auxiliary materials and equipment vendors better handle fluctuations in raw material prices and changes in market demand, maintaining their profitability.

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