SNEC 2026: Fragmented Strategies Complicate China’s Solar Market Rebalancing; Recovery Still Years Away

Restoring a healthy supply-demand balance across China’s photovoltaic sector, which is in the midst of severe overcapacity, could require at least another two years, said industry representatives at the 19th International Photovoltaic Power Generation and Smart Energy Conference & Exhibition, or SNEC, held in Shanghai on June 3-5.

More than two years since the PV industry entered severe overcapacity, meaningful progress toward capacity rationalization remains limited. Market participants attributed the slow pace of rationalization to a combination of weak regulatory intervention and increasingly divergent business strategies among manufacturers. Differences in market positioning, financial strength and operational structures have encouraged companies to pursue individual survival strategies rather than coordinated efforts to reduce output and stabilize prices.

Fragmented Survival Strategies Delay Capacity Rebalancing

A representative from one of China’s top-five polysilicon producers said that much of the industry’s suspended polysilicon capacity should be viewed as “dormant” rather than permanently retired.

“The capital-intensive nature of polysilicon production, coupled with its high energy consumption and strict project approval requirements, means that virtually every polysilicon facility represents a major industrial investment closely tied to local governments,” the source said. “As a result, much of the idled capacity is unlikely to disappear permanently. Instead, these assets may remain in place while operators wait for new financing opportunities or potential acquisitions by new investors.”

The source added that second-tier manufacturers are increasingly benefiting from diversified business structures that provide greater resilience during the industry’s downturn. For example, the company’s core power transmission and distribution equipment business continues to perform strongly, with order books extending into 2027 and 2028. This has enabled the company to support its polysilicon operations financially and maintain relatively competitive pricing despite prolonged losses across the sector.

As a result, the company is currently operating its polysilicon facilities at approximately 70% utilization, significantly above the industry average.

Industry data appears to support this assessment. According to figures released by the Silicon Branch of the China Nonferrous Metals Industry Association, China’s polysilicon output reached 84,500 metric tons in May, up 2.4% month over month, while the industry’s average operating rate stood at only 35.5%.

A second-tier polysilicon producer echoed similar views at the SNEC, highlighting the advantages of business diversification and a comparatively lighter asset burden relative to larger competitors. The source noted that improving profitability in the company’s electrolytic aluminum business, supported by gradually strengthening aluminum prices over the past year, has helped sustain its polysilicon operations through the current market downturn.

“Our business model, operating priorities and economic interests differ significantly from those of the major polysilicon producers,” the source said. “As a result, coordinated efforts seen during previous downturns—when manufacturers collectively sought to stabilize or raise prices—are unlikely to re-emerge. Companies are increasingly focused on strategies that align with their own commercial interests rather than acting in a unified manner.”

The source added that this growing divergence in business strategies could contribute to wider pricing disparities among suppliers and create additional room for further price declines.

Meanwhile, a leading polysilicon producer said at SNEC that it has begun restarting previously idled production facilities in Sichuan and Yunnan provinces to take advantage of the approaching wet season, which typically brings abundant hydropower availability and lower electricity costs.

“After more than six months of shutdowns, some of our equipment has reached a point where restarting operations is necessary,” the source said. “Our initial plan is to resume production at the minimum load permitted by the equipment. For the second half of the year, we expect output to increase by approximately 70,000 mt, although more visible production growth will likely not emerge until August.”

The source acknowledged that increasing supply volumes continue to exert downward pressure on prices, noting that polysilicon price negotiations took place at levels as low as 31-32 yuan/kg ($4.56-4.71/kg) during SNEC.

According to the OPIS Global Solar Markets Report published on June 2, the China Mono Premium assessment, which reflects mono-grade polysilicon used in N-type ingot production, was assessed at 34.071 yuan/kg, equivalent to 0.072 yuan per watt peak.

“Those attending SNEC in search of signs of market recovery may instead find confirmation that further price declines remain possible after the conference,” the source said, noting that the polysilicon industry entered widespread losses in 2024, when many market participants expected conditions to improve within one to two years. However, current market developments suggest that industry pressures could persist for another two years before meaningful recovery emerges.

Upstream Manufacturers Expand Downstream to Diversify Pressure

As upstream manufacturers continue to face mounting pressure from persistent oversupply and weak pricing, OPIS observed a growing number of companies at SNEC pursuing downstream expansion strategies in efforts to diversify revenue streams and reduce their reliance on increasingly challenged upstream segments.

A representative from a leading wafer manufacturer said the company’s strategic focus is shifting closer to end-market applications. Key initiatives include leveraging its overseas intellectual property advantages to promote back-contact or BC products and offering integrated solar-plus-storage solutions for residential distributed-generation projects.

The shift was also reflected in the company’s exhibition presence at SNEC. According to the source, wafer-related displays previously occupied more than half of the company’s booth space. This year, however, wafers were limited to a small section, while the majority of the exhibition area was dedicated to BC products and integrated solar-storage solutions.

The trend appeared to extend to other companies. According to the SNEC floor plan, the number of energy storage exhibitors exceeded that of solar manufacturing companies for the first time, highlighting the industry’s growing emphasis on downstream and value-added segments.

The wafer manufacturer explained that demand conditions in the domestic wafer market have become increasingly challenging. Excluding internally consumed volumes by vertically integrated producers, China’s merchant wafer demand has been at a level of above 20 GW in recent months. Against this backdrop, the company alone has been targeting approximately 10 GW of sales, creating substantial competitive pressure.

“As a result, expanding further into modules and end-market applications can help create internal demand for our products and partially absorb the pressure facing the wafer business,” the source said.

The source added that the company is also leveraging the market channels and customer relationships established by its parent group among project developers and electricity consumers. By strengthening its presence in downstream power generation and module businesses, the company hopes to gradually improve profitability across the broader value chain, including upstream operations.

Similar views were expressed by another specialized wafer producer, which said it has been actively supporting customers developing BC products through joint research and development efforts and collaborative cost-reduction initiatives.

“The electrical performance requirements and process parameters for wafers used in BC products differ from those used in TOPCon technologies,” the source explained, referring to tunnel oxide passivated contact solar cell technology. “We have worked with downstream customers to develop differentiated products and solutions. In return, we hope to share some of the value created through these differentiated applications.”

The source added that such collaboration reflects a broader shift in the industry away from purely price-based competition and toward technology-driven differentiation as companies seek pathways out of the current downturn.

Domestic Competition Accelerates Overseas Expansion Efforts

Chinese PV manufacturers have been seeking overseas growth opportunities through manufacturing investments and export sales for the past three years. However, the path has become increasingly challenging as international trade restrictions expand, more regions introduce trade investigations, and companies face the complexities of adapting to local regulatory, financing and business environments abroad.

At SNEC, two manufacturers that had announced major Middle Eastern expansion plans told OPIS that their projects have largely stalled. One company had unveiled a 5 GW TOPCon cell manufacturing project, while another wafer producer had announced plans for ingot and wafer manufacturing facilities in a different Middle Eastern country. Both sources cited disputes over equity structures, financing challenges and difficulties aligning stakeholder interests as key obstacles preventing meaningful project progress.

“Although discussions and efforts regarding the project are still ongoing, progress has been slow,” one source told OPIS. “At the same time, we are evaluating opportunities to establish manufacturing capacity in other countries and regions.”

Despite these challenges, OPIS observed growing interest among participants at SNEC—including upstream manufacturers—in pursuing overseas business and investment opportunities, driven by increasingly saturated domestic markets and limited demand growth within China.

A top-four polysilicon producer told OPIS that it established a dedicated overseas business division for its polysilicon segment earlier this year and is actively exploring international sales opportunities.

“Chinese polysilicon exports still face significant practical challenges, including supply-chain traceability requirements that we are not yet fully equipped to satisfy,” the source said. “Nevertheless, we are seeking opportunities to work alongside downstream partners to access overseas markets.”

Another leading polysilicon producer revealed that it is evaluating plans to establish manufacturing facilities abroad.

“We are assessing multiple regions and actively studying overseas investment environments, although no location has been finalized at this stage,” the source said. “Given our vertically integrated manufacturing structure, we are still evaluating which products would be most suitable for overseas production. Regardless, international manufacturing expansion is a major industry trend, and it will remain one of our strategic priorities over the next two to three years.”

The company also noted that China’s current polysilicon pricing advantage has generated growing interest from overseas buyers. At SNEC, the producer observed an increasing number of enquiries from customers in markets such as India and Turkey, with active discussions taking place regarding potential supply arrangements.

However, market participants cautioned that significant growth in polysilicon export sales is unlikely to materialize in the near term.

“Expanding exports will undoubtedly become an important direction for Chinese polysilicon producers in the future,” one market observer said. “However, meaningful business volumes are unlikely in the short term. Most overseas PV manufacturing ecosystems are being built from the downstream segments upward, and it will take time before large-scale, established wafer manufacturing capacity is developed outside China.”

Near-Term Pessimism Persists Despite Long-Term Industry Fundamentals

The prevailing sentiment among market participants gathered by OPIS at SNEC was largely pessimistic regarding the PV industry’s near-term outlook. Most attendees expressed concerns that supply-demand imbalances remain largely unresolved and could continue to weigh on pricing and profitability across the value chain over the coming years.

“Polysilicon production is expected to increase in the second half of the year compared with the first half, while the market generally expects global end-market installations to decline year over year in 2026,” one market participant said. “Under these circumstances, there has been little meaningful improvement in the supply-demand imbalance.”

Nevertheless, some industry participants believe that the pace of future price declines may be more limited than in previous stages of the downturn. With many manufacturers already selling below production costs, further price reductions are increasingly viewed as ineffective in stimulating demand or accelerating market rebalancing.

“Polysilicon has already fallen to the fourth-largest cost component in module manufacturing,” a top-five module producer told OPIS. “Any further decline in polysilicon prices is unlikely to materially improve project economics or stimulate demand recovery. Instead, additional price weakness may further damage market confidence and erode value across the entire supply chain.”

A leading wafer manufacturer expressed a similar view, noting that intense competition has compressed pricing differentials across the market to negligible levels.

“Currently, the price difference between wafers supplied by major manufacturers and smaller producers is only around 0.02 yuan per piece,” the source said. “When translated into module costs, that equates to roughly 0.002 yuan/wp, a difference that is effectively immaterial in large-scale module tenders.”

Despite the industry’s frustration with persistent oversupply, several market participants indicated that Chinese authorities have not entirely abandoned efforts to guide market consolidation and capacity control.

According to a major polysilicon producer, the China Photovoltaic Industry Association held a meeting of polysilicon manufacturers shortly before SNEC. During the discussions, industry participants were reportedly encouraged to explore ways to continue a polysilicon consolidation initiative aimed at controlling excess capacity.

However, confidence in such efforts has weakened considerably.

“The concept is still being discussed, but without a clear and actionable framework, many companies are no longer willing to devote significant resources or attention to it,” the source said.

Industry participants once viewed the consolidation plan as an important way of accelerating capacity rationalization across the PV supply chain. The initiative envisioned the establishment of an operating platform jointly backed by multiple polysilicon producers to acquire and permanently retire excess capacity.

However, after overcoming numerous obstacles and formally establishing the platform company in December 2025, the initiative was suspended by China’s State Administration for Market Regulation the following month over antitrust and monopoly concerns. Since then, polysilicon prices have resumed their downward trajectory, further undermining confidence in the industry’s ability to coordinate supply-side reforms.

Despite widespread concerns regarding the near-term outlook, many industry participants remain optimistic about the sector’s longer-term prospects.

One attendee noted that while the industry continues to struggle with excess capacity and lacks a clear pathway toward meaningful capacity exits, the structural drivers supporting solar demand remain firmly in place.

“Green energy transition and energy security have become global priorities,” the source said. “These trends are not changing, which means the long-term outlook for the photovoltaic industry remains positive.”

The source acknowledged that the current downturn may continue for some time, but characterized it as a cyclical adjustment rather than a structural decline.

“Every industry experiences cyclical periods of pain,” the source added. “Companies typically make strategic decisions during such periods with a long-term perspective, focusing on their development over the next five years rather than the next few quarters. This downturn has already lasted two to three years. If the industry needs another two years to complete the adjustment process, that would still be consistent with the scale of the imbalance that needs to be resolved.”

—Reporting by Summer Zhang, szhang@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com