Devastating! The Entire Photovoltaic Industry Chain is Losing Money, and the “Bankruptcy Wave” Begins

As the Labor Day holiday approached in late April, while most Chinese workers were looking forward to the break, employees at Shunfeng’s Wuxi plant were protesting with banners reading “Resist the holiday, I need to live.”

Due to insufficient orders, Wuxi Shunfeng decided to give employees at its Wuxi plant an 11-month unpaid holiday starting from May 1st.

Production line holidays are a common practice in the industry, equivalent to a disguised layoff. Many of these frontline workers have been with Shunfeng for over a decade, experiencing the company’s journey from glory to bankruptcy restructuring, and now to its current state of desolation. Naturally, they cannot accept being laid off without cause. Before 2022, Shunfeng’s management team had already undergone a major reshuffle, with a large number of middle and senior management choosing to leave.

“With the departure of this group of old employees, the old Shunfeng will completely disappear, leaving only a brand,” a veteran industry insider sighed in an interview with China Energy Network.

Shunfeng is not an isolated case. After the disclosure of 2023 annual reports and Q1 2024 reports, a batch of companies will be labeled as “ST” (Special Treatment) or delisted from May 1st, such as Zhongli Group (SZ: 002309), Aikang Technology (SZ: 002610), Lingda Shares (SZ: 300125), Jiangsu Sunshine (SH: 600220) and other photovoltaic companies. The risk of delisting hangs over them like a sword. As operational risks expand, they may face more than just delisting.

Since the second half of last year, the photovoltaic industry has entered a new winter adjustment period. Even leading companies feel immense pressure, with layoffs and production shutdowns constantly making headlines. After struggling for half a year, weaker companies are finally unable to hold on, and a large-scale “reshuffle” is inevitable.

This is the darkest moment for Chinese photovoltaic companies, and no one can say for sure how long it will last. At least for now, there are no signs of hitting bottom.

Production Line Reality: “Employees Sitting in the Workshop Playing on Their Phones”

Shunfeng’s holidays and layoffs are a microcosm of the module and cell companies. Following the low capacity utilization in the industry in Q4 last year, the operating conditions of the module and cell segments have further deteriorated. In addition to Shunfeng, there are rumors of multiple companies or projects being sold.

In March this year, cell manufacturer Haiyuan Composite Materials announced the termination of its 15GW N-type high-efficiency photovoltaic cell and 3GW high-efficiency photovoltaic module project in Chuzhou, and transferred it to Aiko Technology for 38 million yuan.

Xie Jian, former executive president of Jingneng Technology and former chairman and president of Dongfang Sunrise, also ended his entrepreneurship. He transferred the equity of his self-created module brand “Yuantai Photovoltaic” to Hongyuan Green Energy and joined a leading module manufacturer as a professional manager.

These two companies are still considered lucky, as they have found someone to “take over.” A large number of cell companies can only shut down production and take holidays. Lingda Shares, which was recently labeled as “ST,” has had its 3.5GW PERC solar cell production line in Jinzhai Jiayue New Energy shut down since mid-March. According to an announcement on April 27th, the company expects to be unable to resume normal production within three months.

“Currently, most of the industry’s PERC-related production lines are shut down,” Hu Zhiqiang, founder of Cege Photovoltaic Forum, told China Energy Network.

According to TrendForce’s China Photovoltaic Industry Bidding Database, in the photovoltaic module bidding from January to April this year, N-type modules accounted for 80% of the bids. This means that the market share of PERC has rapidly shrunk to 20%, and it is not hard to imagine how difficult it is for PERC production line companies to survive.

Those struggling to maintain production are also reporting salary cuts or delayed wage payments. A company that was recently labeled as “ST” on the A-share market has not paid its employees for two months; another company that has cross-border operations in TOPCon cells issued a notice to delay the payment of March and April wages, and then began holidays, during which the local minimum wage standard (2,260 yuan/month) will be paid.

Some companies are still holding on, but it can be described as “putting on a brave face.” Hu Zhiqiang told China Energy Network that a company that has deployed heterojunction cells and is in trouble currently only pays base salaries. Employees work 8 hours a day, just sitting in the workshop playing on their phones. And this company is not the only one using base salaries to keep employees playing on their phones.

With downstream companies barely surviving, upstream companies are also struggling. A person from a silicon wafer company said that crystal pulling capacity has been largely shut down, and even leading companies have a capacity utilization rate of only 50% or even lower.

In the wafer segment, small slicing OEM factories have basically all closed down. Medium-sized enterprises are all reducing production. A person from a silicon wafer OEM company said that the capacity utilization rate in April and May is around 70%, and the “pressure is very high.”

It’s not the worst, it’s just getting worse. According to Hu Zhiqiang, a third-party silicon wafer manufacturer, due to high inventory, only worked for two or three days in more than twenty days.

In comparison, the silicon material segment is doing a bit better, with full production in the first quarter. However, according to the Silicon Industry Branch, as of early May, three silicon material companies have entered a maintenance state, and another five will begin maintenance or technological transformation within this month.

Compared with the downstream being in a state of deep water and fire, the reshuffle of silicon materials has just begun. The price of silicon materials has fallen below the industry’s cost line, and a large number of companies with poor cost control will pay a heavy price for this round of large-scale expansion.

Big Price Cuts: The Entire Industry Chain is in a Difficult Situation

“April was bad, May is even worse!” said the aforementioned silicon wafer company employee, complaining about the current market situation.

The second quarter should have entered the industry’s peak season, but the reality is that prices across the photovoltaic industry chain have fallen sharply.

Following the fall of module prices to below 1 yuan in the fourth quarter of last year, module prices have continued to decline this year. Taking the price of N-type TOPCon modules as an example, according to Infolink data, it has dropped from 0.98 yuan/W in mid-to-late January to 0.86 yuan/W now, a drop of 12%.

After large-scale losses in the first quarter, silicon wafer prices have continued to fall, dropping by 0.7 yuan in just over four months, a drop of more than 30%. Taking N-type M10 monocrystalline silicon wafers as an example, they have now fallen to 1.4 yuan/piece.

The cell segment is also not making money. Infolink data shows that the average transaction price of N-type cells has dropped to 0.38 yuan/W; the average price of P-type 182mm cells has even dropped to 0.33 yuan/W.

If silicon material companies still had a slight profit in the first quarter among the four major segments, then from April onwards, silicon materials have also entered a state of loss. As of May 9th, the average transaction price of N-type materials has dropped to 45,300 yuan/ton, and the average transaction prices of monocrystalline dense materials and monocrystalline cauliflower materials have both fallen below 40,000 yuan, dropping to 39,000 yuan/ton

(Article Source: China Energy Network, WeChat ID: hxny3060)

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