(Yicai Global) Sept. 29 -- Diamond wire maker Hengxing Technology saw its share price surge by the exchange-imposed limit of 10 percent today as upstream businesses in the photovoltaic industry continue to benefit from China's ever increasing solar power installations.

Hengxing's stock price [SHE:002132] closed at CNY3.54 (USD0.52) apiece.

"The market demand for diamond wires is positively associated with the output of photovoltaic silicon wafers," Deputy General Manager Li Ming told Yicai Global.

Major semiconductor producers use diamond wires to cut photovoltaic silicon wafers, which are a key component of solar cells, Li said. A single wafer requires around 1.5 meters of diamond wire, and as the wafers get larger, the length of wire needed is also likely to increase. The wires are not reusable and therefore there will always be demand so long as silicon wafers are being produced.

Hengxing churns out 300,000 kilometers of diamond wires a month, Li said. The Zhengzhou, central Henan province-based firm is expanding capacity to 500,000 km a month by the end of the year due to the huge demand.

However, competition is fierce. Yangling Metron New Material is the country's biggest producer of diamond wires and last year held 47 percent market share, according to the Yangling, central Shaanxi province-based firm.

"Companies with high supply capacity can seize market share and get a leg up on competitors," Li said.

Diamond wire producers are likely to face a price war despite the growing demand as supply is on the rise, Li said. They will need to cut costs through better business positioning and the upgrading of techniques, he added.

A previous price war in 2015 led to a boom in domestic manufacturers as they undercut imported materials from Japan to dominate the market.

Editors: Tang Shihua, Kim Taylor