Solar Crisis: China’s Giants Face Record $5.5 Billion Loss Amid Oversupply

Leading Chinese solar energy giants, such as TCL Zhonghuan, Longi Green Energy, and Tongwei, are bracing for a combined deficit of up to 38.4 billion yuan ($5.5 billion) in 2025, eclipsing the previous year’s record losses. This financial downturn underscores the severe difficulties the sector faces in curbing aggressive price wars despite government efforts to discourage "involutionary" competition. Tongwei has reported the most significant strain, anticipating losses as high as 10 billion yuan due to a massive imbalance where production capacity has far outstripped market consumption. Although China’s total solar capacity surged by 42% by late 2025 to reach 1.16 terawatts, this rapid expansion has primarily resulted in a glut of oversupply across the entire photovoltaic supply chain.

The crisis is being compounded by external pressures and rising operational expenses. On the global stage, Chinese manufacturers are grappling with tightening trade restrictions, particularly from the U.S., which has targeted imports from Southeast Asian hubs used by Chinese firms to bypass tariffs. Domestically, profit margins are being squeezed by the skyrocketing costs of essential raw materials; silver, for instance, has hit a multi-year peak of over $90 per ounce. Trina Solar noted that these high commodity prices have severely damaged the profitability of their solar module production.

In an attempt to stabilize the market, industry leaders like Tongwei have recently formed alliances to consolidate the silicon supply chain and prevent a further collapse in prices. However, analysts at Gavekal remain skeptical about the longevity of such cooperatives, noting that individual firms often abandon production quotas the moment market conditions show signs of improvement. Structural shifts are also becoming more common, exemplified by TCL Zhonghuan’s move to acquire the struggling manufacturer Das Solar. Meanwhile, the Chinese government is taking its own steps to address international friction, with the Ministry of Finance slated to end export tax refunds for solar products in April 2026 to discourage dumping. Despite these interventions, experts from Soochow Securities caution that high inventory levels and sluggish demand will likely maintain heavy pressure on the industry through the early months of 2026.