Since the second half of this year, price reduction has become the "keyword" of the photovoltaic industry. Especially since the fourth quarter, the prices of the four major links of the industrial chain (silicon materials, silicon wafers, batteries, and components) have continued to fall, and many companies have complained that they have fallen. The cost line has aroused widespread concern. It is generally believed in the industry that the large amount of production capacity generated by the vigorous expansion of production since last year is one of the main reasons for the price reduction, and the imbalance between supply and demand is also reflected in the revenue and profit performance of many photovoltaic enterprises in the third quarter.

Capacity consumption is gradually slow, performance is weak, and price expectations are low. Even in the face of these conditions, there are still "warriors" who expand production against the trend. Why do they make decisions to expand production? What are their plans for the future?

Daquan Energy, a leading silicon material, launches new projects against the trend

on the evening of December 13, daquan energy (688303.SH), one of the four silicon giants, announced that it had recently signed an investment agreement with Shihezi municipal people's government, Shihezi economic and Technological Development Zone Management Committee and Xinjiang Tianfu Energy Co., Ltd., agreeing that the company would invest in the construction of "daquan energy silicon based new materials industrial park project" in Shihezi City, Xinjiang ". According to the announcement, the project's fixed asset investment of RMB 15 billion yuan will be built in accordance with the "overall planning and phased implementation" method . the first phase of the project is planned to invest RMB 7.5 billion yuan to build a project with an annual output of 50000 tons of polysilicon and supporting 150000 tons of industrial silicon and 1.2 million round silicon cores. The second phase plans to invest 7.5 billion yuan to build a project with an annual output of 50000 tons of polysilicon and supporting 150000 tons of industrial silicon and 1 million.

Daquan Energy's main business is polysilicon used in photovoltaics. In recent years, its production capacity has remained above 10% of domestic production capacity. The company's performance is also highly correlated with the price of silicon materials . In 2022, the price of silicon materials "skyrocketed", and Daquan Energy's performance also rose simultaneously. The annual operating income was 30.94 billion yuan, an increase of 185.64 percent year-on-year; the net profit attributable to the parent company was 19.121 billion yuan, an increase of 234.06 percent year-on-year; the net profit margin was as high as 61.8 percent.

But this year, the price of silicon materials has been declining since the first quarter, and Daquan Energy's performance has also fallen into a dilemma where revenue and net profit have both declined year-on-year since the first quarter. In the third quarter, according to the previously announced third-quarter report, the company's revenue from January to September this year fell 47.81 year-on-year, net profit fell 66.09 year-on-year, and net profit margin also fell to 39.72 . In addition, Daqo Energy shares also fell simultaneously, down more than 30% from the beginning of the year.

At present, according to the latest data released by the Silicon Industry Branch of the China Nonferrous Metals Industry Association, silicon materials are still in a price reduction trend, with a decline of more than 70% since the beginning of the year. Lan Tianshi, co-CEO of GCL Technology, said in an interview recently that due to the continuous release of production capacity, silicon prices may be at a low ebb in the next year.

The foundation is getting thinner and thinner, and the prospects are not promising. What are the considerations for Daqo Energy to expand production this time?

In the announcement, Daquan Energy stated that this investment can further optimize the company's main business structure, realize the diversification of the company's product structure, and enhance the company's comprehensive competitive advantage and profitability . At the same time, it also emphasized that the source of funds for this foreign investment is self-owned funds or self-raised funds, which will not adversely affect the company's financial status, normal production and operation, and there is no situation that harms the interests of the company and shareholders.

Some people in the industry suggested that in the new projects announced this time, a high proportion of industrial silicon is worthy of attention, which shows that Daquan Energy has been actively implementing an upward extension strategy to resist the impact of the continuous downward price of the photovoltaic industry chain.

titanium media App combed and found that silicon sales have always been the main source of Daquan energy's revenue and profit. when the price reduction wave hit the performance, Daquan energy has recently stressed the importance of cost control and supply chain security in financial reports, investor exchanges and performance meetings. while extends the investment vertically to industrial silicon, which is conducive to realizing large-scale production and strengthening the ability to control capital, to some extent hedge the risk of price reduction . In addition, Daqo Energy has previously said that will extend the industrial chain laterally to semiconductor silicon materials to create strong financial statements .

according to public information, the expansion of silicon production since November also includes: a new project signed by Shandong xinfa group with an annual output of 125000 tons of high purity crystalline silicon and 150000 tons of industrial silicon, with a total investment of 14.2 billion billion yuan; Baofeng group's 6.4 billion-million-yuan investment in Guazhou Baofeng polysilicon upstream and downstream collaborative project has also been officially put into production.

Battery and component links are more active, and TOPCon's new capacity accounts for the majority

compared with silicon materials and silicon wafers (no new contract or production of domestic silicon wafer projects since November, only atlas has a new n-type silicon wafer project in Thailand), there are few links to expand production, and the actions of battery and component manufacturers in the middle and lower reaches are obviously more active.

according to the statistics of grassroots photovoltaic, throughout November, a total of 15 projects were signed, started and put into production in the cell link, with an average of one every 3 days. In the component link, 5 projects were put into production in November and 2 were signed and settled.

titanium media App combed the list of related projects and the project dynamics since December and found that TOPCon batteries and modules have significantly more landing capacity . among them, the more concerned ones include the Shijiazhuang base 10GW slice and 10GW battery project of TOPCon camp leader jingao technology (002459.SZ), Baotou base 5GW photovoltaic module project, and other companies, anhui Meidalun Phase I 4GW battery project with a total investment of 8 billion yuan and GCL integrated 12GW high-efficiency TOPCon components are also worth noting.

HJT landing capacity, new signed projects are also many, including Hefei Huasheng 5GW battery, Gree 7.2GW battery, 5GW components, etc.

In contrast, BC Technology has fewer new projects, with no major moves by leading companies Aixu (600732.SH) and Longi Green Energy (601102.SH).

In addition, perovskite, which is regarded as the main force of next-generation photovoltaic cell technology, also has new trends. The perovskite battery project of Guangdong Mailuo Energy Technology Co., Ltd. completed the investment introduction cooperation contract in November, and will set up a research and development and production headquarters for perovskite photovoltaic modules. The total investment of the project is about 2 billion yuan, and it is expected to be put into production in the first half of 2024.

some people in the industry commented that the current expansion and signing of contracts are much less than those in the first half of the year, but still shows that the market has demand for new n-type batteries and component products, and manufacturers are also optimistic about the logical main line of technology generation replacement .

However, the flip side of less expansion is the constant news of production cuts and layoffs. Titanium media App noticed that recently circulated a picture in the photovoltaic circle, listing the layoffs and production reduction plans of many enterprise manufacturers. most of the leaders familiar in the circle are listed .

in the industry group discussion, an observer said that seasonal factors at the end of the year superimposed overcapacity, low power, low prices and other industry difficulties, leading manufacturers to consider reducing production and layoffs is also reasonable , as to whether the number of layoffs of 10,000 people is credible, there is no real hammer evidence yet.

many leading enterprises have also responded to relevant rumors recently. for example, longji green energy responded that normal optimization would be made at the end of the year according to the assessment situation and strategic arrangements, but the specific proportion and number of people have not yet been determined. Another BC route leader Aixu shares said that the old P-type production capacity will gradually withdraw, but the company's focus on BC new production capacity is still in the climbing stage, will not reduce production, there is no overall layoff plan. Jingke and Jingao, which take the TOPCon technology route, also said that they have no plans to lay off workers and that new production capacity will be launched one after another.

Although the response of leading companies is quite "refuting rumors", rumors in the circle are becoming more and more popular. Some observers believe that the industry's "knockout competition" may start in 2024. Before the dust settles, the expansion of production will be With fewer and fewer, production cuts and layoffs are inevitable after all.

(Author | Hu Jiameng , Editor | Liu Yangxue )