(Yicai) Feb. 25 -- China’s Tongwei has unveiled plans to acquire its Chinese peer Lihao Clean Energy, consolidating its position as the world’s largest producer of high-purity crystalline silicon material.

Tongwei has signed an intention agreement with Lihao’s controller Duan Hong and the management shareholding platform under his control to buy a 100 percent stake in the sixth-largest maker of solar silicon globally via cash payment and share issuance, Chengdu-based Tongwei announced yesterday.

The transaction price will be determined through negotiation based on an asset evaluation report issued by a qualified assessment agency hired by Tongwei, the firm added.

Tongwei’s shares have suspended trading today for up to 10 trading days to ensure fair information disclosure and avoid significant impacts, the company pointed out. They [SHA: 600438] closed at CNY18.16 (USD2.64) yesterday.

Tongwei has the largest annual production capacity of high-purity crystalline silicon material of 900,000 tons. After the deal is completed, it will incorporate Lihao’s 200,000-ton capacity to reach 1.1 million tons. Moreover, Lihao has additional 100,000 tons of capacity under construction.

Lihao was founded in 2021 by Duan, who had served as a senior executive at Tongwei for a long time. Its main products are N-type silicon materials for high-efficiency batteries.

Global solar silicon prices began declining in November 2022 and bottomed out in the middle of last year, with a total maximum drop of about 88 percent. This was mainly because large-scale new production capacity was completed and put into operation between 2021 and 2023.

As a result, many solar companies swung into the red in the period. Tongwei, which heavily invested in new production capacity in the past years, reported a net profit of CNY13.6 billion (USD2 billion) in 2023, then losses of CNY7 billion (USD1 billion) in 2024 and CNY9 billion to CNY10 billion last year.

Editors: Tang Shihua, Futura Costaglione