Navigating the Solar Industry Through Cycles

From being "outsiders" in terms of raw materials, equipment, and market, to achieving "world firsts" in manufacturing, installed capacity, and power generation, China's photovoltaic (PV) industry has grown into a competitive advantage industry on a global scale, transitioning from "following" and "running alongside" to "leading."

Data released by the International Energy Agency shows that in 2023, China's newly installed photovoltaic power capacity was equivalent to the global new solar photovoltaic installed capacity in 2022, making it the largest photovoltaic market and product supplier globally.

Currently, the photovoltaic industry is facing downward pressure due to a new round of cyclical challenges. The Ministry of Industry and Information Technology has stated that there is indeed a certain level of risk of stage and structural overcapacity in China's photovoltaic industry, but overall, it is within the normal range of industry development.

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What is unique about this cycle, and how should the photovoltaic industry navigate through it? Recently, on CCTV's "Dialogue" program, entrepreneurs such as TCL founder and chairman Li Dongsheng deeply analyzed the current situation and development trends of the photovoltaic industry, and offered unique insights for breaking industry bottlenecks and exploring new spaces.

Li Dongsheng, Founder and Chairman of TCL

The industry faces a new round of downward cycle

Regarding his insights into the current photovoltaic industry, Li Dongsheng said that after more than 20 years of development, China's photovoltaic industry has become the world's leading force. However, in this round of downward cycle, the competition in the photovoltaic industry is very fierce, which will eliminate some capacities and enterprises, but also promote more enterprises to become stronger.

He further explained that over the past four years, the photovoltaic industry has experienced significant development with considerable profitability, and the market has shown a rapid growth trend. Existing enterprises quickly expanded their business scale, and at the same time, a large number of enterprises from other industries entered the photovoltaic field, jointly promoting the expansion of the industry scale and the surge in the number of enterprises. Faced with this situation, all enterprises are looking forward to occupying a place in the market, which has led to increasingly fierce price competition, causing product prices to continue to fall.

Under this background, the overall profit space of the industry has been compressed, and the profitability of many enterprises in the industry chain has declined. TCL Zhonghu's 2024 semi-annual report shows that the company achieved a revenue of 16.213 billion yuan during the reporting period, and the net profit attributable to the parent company was -3.064 billion yuan, a year-on-year decrease of 167.53%.

In response to this, Li Dongsheng frankly said that looking back over the past years, since the last cycle of photovoltaics, TCL Zhonghu has never encountered a situation of semi-annual loss. In view of this, it has stepped to the front line to meet the challenge. "After going to the front line, I have a deeper understanding of the competitive pressure faced by the photovoltaic industry. Of course, more importantly, we need to deeply review ourselves, clarify which measures are appropriate in the past business decisions, and which are insufficient, how to adjust, so that we can do better in the future."In fact, "cyclicality" is not unfamiliar to manufacturing industries such as photovoltaics. Looking back, China's photovoltaic industry has gone through three rounds of cyclical adjustments. "Almost all manufacturing industries cannot avoid the cyclical fluctuations of industry competition, so the development of the entire industry is always fluctuating from a period of oversupply to a period of undersupply. I believe that with the development of the photovoltaic industry, the amplitude of these fluctuations will become smaller and smaller," said Li Dongsheng.

The industry is poised to emerge from the cyclical trough

Each cycle contains new opportunities for change. How can the photovoltaic industry navigate through this cyclical trough? Li Dongsheng proposed three "keywords": technological innovation, globalization, and collaborative cooperation. In terms of technological innovation, he believes that industry enterprises need to rely on their own technological innovation and industrial transformation and upgrading to maintain and even enhance their competitive advantage, so that they can go further.

Li Dongsheng, founder and chairman of TCL

Injecting momentum into industry quality improvement through technological upgrading is also the "main melody" of TCL Zhonghuan's development. In the semi-annual report, TCL Zhonghuan stated that the company continues to promote Industry 4.0 and flexible manufacturing, adheres to technological innovation, and enhances relative competitiveness. During the reporting period, the company's photovoltaic single-crystal capacity was increased to 190GW, photovoltaic material product shipments were approximately 62GW, a year-on-year increase of 18.3%, and the comprehensive market share of silicon wafers was 23.5%, ranking first in the industry.

Li Dongsheng also emphasized that expanding the global market and opening up a larger growth space is also a "must-answer question" for the current photovoltaic industry. "Most of the products of China's photovoltaic industry are concentrated on domestic manufacturing and then sold to the global market. At present, the global economic pattern is undergoing restructuring, and globalization rules are also facing many changes, and this trend of change increasingly emphasizes the regionalization and localization characteristics of development and economy."

Based on this, in his view, if China's photovoltaic industry wants to continue to maintain a leading position globally, it must change the single product export model and instead establish a stronger industrial capability globally, with the aim of deeply integrating into the local economic system. China's photovoltaic industry must focus on improving its own globalization capabilities in order to continue to develop healthily.

For TCL Zhonghuan, it relies on the technical advantages of G12 silicon wafers, Industry 4.0 flexible manufacturing capabilities, and its own independent intellectual property rights system to continuously improve overseas localization manufacturing capabilities. Currently, TCL Zhonghuan has cooperated with RELC, a wholly-owned subsidiary of the Saudi Arabian Public Investment Fund (PIF), and Vision Industries to jointly promote the establishment of the largest-scale crystal wafer factory overseas, providing support for the company to enhance its global competitiveness.

It is worth noting that Li Dongsheng also called on the industry to establish a better concept of competition and cooperation, strengthen collaborative cooperation, maintain the industrial market ecosystem, and quickly emerge from the trough. Everyone strengthens industry self-discipline, produces the required products according to market demand, which is conducive to avoiding irrational competition, making the entire industry's operating conditions more stable.

Looking to the future, Li Dongsheng said that from the perspective of global economic development trends, clean energy green development is a major trend. This means that the future growth of global clean energy, especially photovoltaic energy, is certain. A high-growth industrial market can digest planned production capacity relatively quickly. "So, the difficulties are temporary, and the future is bright."The International Energy Agency (IEA) predicts in its 2024 Renewables Report that over the next decade, solar photovoltaics will become the core force driving the rapid development of global renewable energy. By 2030, it is expected that 80% of the world's additional 5,500 GW of clean energy capacity will come from solar power.

"I am very confident about the future of the industry," said Li Dongsheng. "The photovoltaic industry has gone through several cycles, and those who can still stand at the forefront are heroes. After the storm comes the rainbow. I believe that after this cycle, China's photovoltaic industry will still be able to lead the global industry, and China's photovoltaic industry will make a greater contribution to global green development."