The Chinese solar industry is by far the dominant country in terms of solar product manufacturing with 9 of the top 10 manufactures of solar panels coming from China. The major Chinese companies have continuously added capacity at a far greater level than global demand as they look to kill their competitors through sheer scale and costs. An average of 30 GW of solar capacity was added in 2019 across wafers, cells, and modules which is now around 200 GW of capacity as compared to the 110 GW of global demand in 2018.

The larger companies such as JA, Longi, and Tongwei have announced more plans to add tens of gigawatts of capacity in the solar supply chain to gain more market share and kill the smaller, marginal players through sheer size. Longi plans to have 30 GW of solar panel capacity by the end of 2021 apart from its massive ingots and wafer capacities. Tongwei has become another major colossus with huge polysilicon and solar cell capacities which dwarf the size of other companies.

Chinese companies were always dominant in the downstream part, now they are also adding thousands of tons of polysilicon capacity which is leading other companies from Korea and Germany to shut down their plants as they are unable to compete with China on the costs which have fallen below prices for most of the foreign companies. Though Chinese demand has fallen, the companies have not stopped expanding because they see solar cost dynamics improving each year as it starts to replace fossil fuels in the power industry. They want to keep their leadership by expanding capacity and gaining more market share through lower costs. Their scale and size mean that the bigger companies have sales and marketing offices in almost every market. Their expansion plans also ensure that the smaller competitors will get intimidated and not expand capacity.

The expansion plans have already seen Korean companies such as OCI and Hanwha shut down their Korean polysilicon operations as they don’t see a future where they can operate profitably. These companies have taken hundreds of millions of dollars in writedowns. The trade war between the USA and China has not really hurt these companies as they have used their SE Asian factories to bypass whatever little trade protection is afforded by major consumers such as India and the USA. The costs of these companies have become so low that even with a 20-30% duty, their product prices are cheaper than that of their foreign competitors. Panasonic which has been present in the industry for over 20 years has also decided to pack up and look for greener pastures.