on April 24, tongwei shares (SH600438) shares closed at 21.88 yuan/share, down 4.41 percent, with the market value falling below 100 billion yuan.

Tongwei shares for silicon, battery chip double lead. Recently, silicon prices continue to fall, the battery chip industry is also taking P-type impairment provisions and the transition to N-type.

In recent years, Tongwei has actively transformed itself into an integrated manufacturer, from insisting on the two main businesses of silicon and battery chips to entering silicon chips (including pull rods and chips) and components, and even entering the industrial silicon field upstream of silicon.

The dilemma of P-type battery

According to InfoLink data, Tongwei shares will remain the battery chip leader in 2023. Tongwei shares entered the component link last year, deducting the component self-use volume is still the first.

In the battery segment, Tongwei has been the "big brother" of the industry for many years, but in the era of rapid transformation from P-type to N-type, Tongwei may face challenges. In the N-type field, on the one hand, head manufacturers such as Jingke Energy (688223.SH, stock price 7.54 yuan, market value 75.44 billion yuan) and Jingao Technology (002459.SZ, stock price 13.92 yuan, market value 46.071 billion yuan) have built their own N-type TOPCon (tunneling oxide passivation contact) battery chip production capacity on a large scale. On the other hand, Junda shares have an advantage in the N-type TOPCon. In terms of heterojunction, (battery chip) manufacturers are basically for their own use.

according to the relevant research report of jingke energy, the company's n-type products are in the market leader position, 90GW of battery chip production capacity, with n-type high-efficiency TOPCon production capacity of more than 70GW, accounting for 78%. It can be seen that the TOPCon production capacity of Jingke Energy is twice the cumulative shipments of TOPCon battery chips from the top five manufacturers in 2023.

in addition, although tongwei shares are still the leader of battery chips, they seem to lag behind shangrao jietai new energy technology co., ltd. (hereinafter referred to as jietai technology) owned by junda shares (002865.SZ, stock price 50.53 yuan, market value 11.549 billion yuan) in the field of n-type TOPCon battery chips.

according to jietai technology's official wechat, the top five manufacturers of TOPCon battery chips have shipped about 35GW, while jietai technology's n-type TOPCon battery chips shipped 20.58GW, accounting for 58% of the top five manufacturers of TOPCon battery chips. jietai technology ranked first in global shipments of TOPCon battery chips in 2023.

While TOPCon cells are being released, the demand for PERC (passivated emitter and back contact cells) cells is shrinking. InfoLink said that in the second half of 2023, with the expansion of TOPCon production gradually falling to the ground and climbing, the demand for PERC battery chips shrank rapidly and the price plunged. At the end of the year, manufacturers faced serious losses, with gross profit margin reaching-11%, and enterprises shut down their production lines to reduce losses.

It is important to note that in 2023, the P-type will still dominate, while 2024 may become the year when the N-type dominates. According to InfoLink, in 2023, the market share of P-type and N-type will be 71% and 27%, respectively. In 2024, the N-type is expected to fully replace the P-type, with a market share of nearly 79%.

InfoLink said that in the process of technology iteration this year, those manufacturers who get rid of the burden of old production capacity and continue to innovate and develop will get a better market share.

Silicon prices are in a rapid collapse cycle

Similar to the battery, the silicon field is also facing the challenge of changing from P-type silicon to N-type silicon. According to the 2023 semi-annual report of Tongwei shares, during the reporting period (the first half of 2023), the company's production bases were operating at full capacity, achieving sales of 177700 tons of high-purity crystalline silicon, an increase of 64% year-on-year, and the domestic market share reached about 30%. The current production cost has dropped to less than 40000 yuan/ton.

on April 18, hesheng silicon industry (603260.SH, stock price 45.87 yuan, market value 54.228 billion yuan), a new silicon power, told national business daily: "at present, the supply of p-type silicon exceeds demand, while the supply of n-type silicon is still in short supply. In the future, with the landing of N-type battery capacity, the demand for N-type silicon will also increase rapidly. That is to say, the current polysilicon industry overcapacity, mainly for the excess capacity of backward."

silicon giant Daquan Energy (688303.SH, stock price 23.94 yuan, market value 51.35 billion yuan) also said in its 2023 annual report that with the wide application of the downstream new generation of N-type silicon wafer-based battery technology (such as Topcon battery and heterojunction battery), the upstream N-type silicon material has seen explosive growth. As one of the major manufacturers of high-purity N-type silicon, the company is keenly aware of market changes and early layout, so that the company can achieve the rapid release of N-type silicon products in this round of product iteration. In 2023, the company sold 53200 tons of N-type silicon, of which N-type silicon sales accounted for 59.11 percent in December.

according to the 2023 semi-annual report of tongwei shares, with the gradual production of downstream n-type technology production capacity, the price difference of N/P silicon materials has further widened. the company has complied with the changes in market demand and rapidly increased the market supply of n-type materials. the sales volume of n-type products has increased by 447 year on year.

regarding the proportion of n-type silicon, Liu hanyuan, chairman of tongwei group's board of directors, said in an interview with CCTV reporters that in 2023, the sales proportion of tongwei n-type silicon will be about 25%-30%. By December last year, the proportion had risen to 60%-80%. It is expected that in March this year, Tongwei will complete the transformation of nearly 90% of P-type products to N-type products.

The silicon industry not only faces challenges from P-type to N-type, but also continues to decline in product prices. On April 17, the Silicon Branch of the China Nonferrous Metals Industry Association (hereinafter referred to as the Silicon Branch) stated: "At present, the price of silicon materials has fallen below the production cost of enterprises, reaching the cash cost of some enterprises."

According to the data of the Silicon Industry Branch on April 17, the transaction price range of N-type rod silicon is 50000 yuan/ton to 54000 yuan/ton, and the average transaction price is 52500 yuan/ton, down 10.41 from the previous month. The transaction price range of P-type dense materials is 43000 yuan/ton to 49000 yuan/ton, and the average transaction price is 45900 yuan/ton, down 5.75 from the previous month. Considering that the production cost of Tongwei shares has dropped to less than 40000 yuan/ton, the price of silicon has not yet fallen below the production cost of Tongwei shares.

on April 11, InfoLink said that the inventory level at the silicon supply end had been accumulated for more than 22 days as of the beginning of the month, and the inventory scale and proportion of different enterprises were slightly different. however, starting from the second quarter, the situation of silicon storage stagnation at the silicon supply end will become more and more obvious, and the trend of inventory normalization including first-line enterprises is likely to start. On April 17, InfoLink also said that the overall price of (silicon) is in a rapid collapse cycle, and the price of many orders is still uncertain.

Source of cover picture: every photo taken by reporter Zhang Jian (data picture)