Key facts
- China's solar panel industry is experiencing a severe price slump due to overcapacity.
- Manufacturers are reluctant to implement significant production cuts, fearing loss of market share.
- Major Chinese solar companies have reduced their workforce by approximately 31%, resulting in about 87,000 job losses in 2024.
- Over 40 solar companies have faced bankruptcy, delisting, or acquisition since the previous year.
- Beijing is advocating for capacity reductions and the retirement of outdated facilities to stabilize prices.
- Production in all major solar manufacturing segments in China has decreased in the first half of 2026.
China's solar panel industry is grappling with a severe price slump and overcapacity, despite government efforts to curb competition and stabilize the market. Manufacturers are hesitant to reduce production significantly, fearing a loss of market share, which has led to widespread layoffs and company failures. Chinese firms hold approximately 80% of the global solar panel market share.
In 2024, major solar panel manufacturers like Longi Green Energy, Trina Solar, Jinko Solar, JA Solar, and Tongwei collectively cut nearly one-third of their workforce, resulting in about 87,000 job losses. This downturn, which began in late 2023 and worsened through 2024 and 2025, has seen over 40 solar companies go bankrupt, delist, or be acquired. The aggressive expansion between 2020 and 2023, fueled by Beijing's focus on "new three" industries, triggered a fierce price war. U.S. tariffs on Chinese factories in Southeast Asia have further squeezed margins, contributing to an estimated $60 billion in industry losses in 2024.
Beijing has signaled its intent to intervene, with President Xi Jinping calling for an end to "disorderly price competition" and the industry ministry pledging to retire outdated production capacity. Top polysilicon producers have discussed forming an OPEC-like alliance and creating a fund to close low-quality facilities. However, local governments are reluctant to enforce capacity cuts due to concerns about job losses and economic growth. Analysts estimate that 20-30% of manufacturing capacity needs to be eliminated for profitability to return, yet new projects continue to emerge.
In the first half of 2026, China's photovoltaic industry entered a broad contraction. Polysilicon production fell 9.8% year-on-year to 538,000 tonnes, wafer output decreased 7.3% to 293 GW, cell production declined 21.9% to 260.7 GW, and module output dropped 35.1% to 201.3 GW. By early July 2026, polysilicon prices were 42.3% lower than in January. The China Photovoltaic Industry Association views this as a "deep adjustment" and a return to more sustainable growth, expecting both domestic and global PV additions to shrink in 2026.