The two major leaders have successively announced "production reduction and control of production", accelerating the clearing of capacity in the photovoltaic industry, and a self-rescue action to eliminate "involution-style" competition is underway.

On the evening of December 24, Tongwei Co.,Ltd's official Weibo announced that currently, due to the southwestern region entering the dry season during winter and the increase in electricity prices on a month-on-month basis, considering the overall photovoltaic industry is still in a bottom adjustment phase, the company’s subsidiary Yongxiang Co.,Ltd is actively responding to the spirit of the central economic work conference, committed to eliminating "involution-style" competition, and promoting the long-term healthy development of the photovoltaic industry. They will gradually arrange for the four high-purity silicon production companies under Yongxiang Co.,Ltd to carry out technological transformation and maintenance work according to the overall production and operation plan of the company, with phased orderly production reduction and control. Future resumption arrangements will be planned according to changes in electricity prices and market conditions at the project site.

Tongwei Co.,Ltd stated that this technological transformation, maintenance and production reduction will help the company reduce operational losses in the high-purity silicon business under the current market environment and is expected to positively impact the company's overall production and profit.

On the same evening, Daqo New Energy's official Weibo announced that currently, the market pattern of supply and demand imbalance for polysilicon has not fundamentally improved, and the industry continues to face severe challenges of overall losses. To strictly implement the spirit of the central economic work conference, standardize corporate behavior, prevent "involution-style" vicious competition, and promote the healthy and sustainable development of the photovoltaic industry, the company will gradually initiate phased maintenance work of the high-purity polysilicon production lines at their production bases in Xinjiang and Inner Mongolia, and orderly reduce and control production for some production lines.

Daqo New Energy stated that this production reduction and maintenance work will lead to a decrease in the effective capacity of high-purity polysilicon, with corresponding reductions in the production and sales of the company's main products. However, from a global perspective, this production reduction and maintenance work will help enhance the future stability of production facilities and product quality, as well as reduce operating costs and lessen the company’s operational losses. Therefore, it is expected that this round of production reduction and maintenance will not have a significant impact on the company's production and operations.

The photovoltaic industry has initiated actions for self-discipline and self-rescue.

According to Tongwei Co.,Ltd, Yongxiang Co.,Ltd has a high-purity silicon production capacity exceeding 0.9 million tons, distributed in SiChuan, Yunnan, and Inner Mongolia, with a market share ranking first globally for many consecutive years. Additionally, public information shows that Daqo New Energy has established an annual production capacity of 0.305 million tons of polysilicon.

Therefore, the total production capacity of these two companies involved in production reduction and control exceeds 1.2 million tons. According to Jiebo Investment Analysis, the scale of this production cut is expected to reach at least 0.8 million tons, leading to a significant decrease in silicon material output from December to January.

Since 2022, the growth rate of China's photovoltaic industry capacity has been excessively rapid, quickly exceeding domestic and international market demand, causing a serious imbalance in supply and demand and improper resource allocation. This situation has led to fierce market competition, resulting in a sharp decline in prices, intensifying the price competition.

With continuous price declines across the industry, corporate profits have significantly deteriorated.

According to the statistics from the China Photovoltaic Industry Association, in the first three quarters of this year, among 121 listed photovoltaic companies, 39 suffered losses, with leading companies experiencing even more severe losses; 11 out of 15 main industry chain companies saw a net income decline of over 100%.

The third quarter report shows that Tongwei Co., Ltd achieved total operating revenue of 68.272 billion yuan in the first three quarters, a year-on-year decrease of 38.73%, with a net income of -3.973 billion yuan. Daqo Energy achieved total operating revenue of 6.005 billion yuan in the first three quarters, a year-on-year decrease of 53.37%, with a net income of -1.099 billion yuan.

To address this, the photovoltaic industry initiated a self-discipline and self-rescue campaign. The China Photovoltaic Industry Association set a minimum component price of 0.69 yuan/W and continuously released cost analysis reports for main products in the photovoltaic industry chain, emphasizing that enterprises should engage in market competition in accordance with the law and avoid selling and bidding below cost.

Guolian believes that recent policies and the Photovoltaic Industry Association have strengthened guidance on reasonable competition on the supply side, which is expected to help the photovoltaic industry emerge from its low point.

Jiebo Investment Analysis pointed out that although production cuts have started, the industry still faces significant inventory pressure; the normal inventory cycle for silicon materials is usually about 1 month of downstream demand. To see the silicon material industry inventory cycle come down to within 1 month by the end of 2025, starting from January, the monthly silicon material production needs to decrease to below 0.09 million tons/month. Since the second half of the year, silicon material prices have been in a state of industry losses with cash costs. Looking ahead, as silicon material production cuts and inventory decrease, silicon material prices and profits are expected to rise moderately and recover.