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Abstract "Polysilicon enterprises have reached this point, not just due to the financial crisis. It is not others but the polysilicon companies themselves that are responsible for their current struggles." From 2002 to 2012, the term "polysilicon" went from being unfamiliar to widely known. Over the past decade, China's polysilicon industry started from scratch, then experienced a rapid rise, only to fall sharply and face severe challenges. How can these companies break out of the crisis and revive?
The pain of overcapacity began around 2004, when there were very few Chinese polysilicon companies. Some products remained in research institutes, while others were stored in warehouses. By 2008, the situation had changed dramatically. At its peak (first half of 2008), the price of polysilicon was $400/kg, far above the $50/kg seen four years earlier.
This sharp price increase led to excessive production capacity. After 2011, as the financial crisis deepened and overcapacity became more apparent, polysilicon prices continued to drop. By the end of 2012, the price fell below $20/kg, causing massive losses for companies.
According to statistics from the China Photovoltaic Industry Alliance in 2012, more than 160 Chinese PV cell and component companies had a total production capacity of about 40 GW, while global PV module capacity was between 50-60 GW. Meanwhile, global polysilicon production capacity was also seriously overextended. The five major suppliers had a combined capacity of 227,000 tons. Each watt of silicon wafer required 5.5 grams of silicon material, which could support 40 GW of production, but global PV installations in 2012 were only 30 GW. As a result, many polysilicon companies both in China and abroad had to halt or reduce production.
In the first half of 2012, over 50% of domestic polysilicon companies were either partially or completely shut down. Although China’s polysilicon output reached 38,000 tons in the first half of 2012, actual company output was only 25,000 tons, indicating that most companies were not operating at full capacity.
High cost pressures forced companies like Xinjiang and Sichuan to suspend operations in April 2012. A new energy company based on polysilicon in Xinjiang and Chongqing Wanzhou said: "We are currently working on the Wanzhou polysilicon project, which is undergoing technological upgrades. We don’t know when it will resume production."
Policy support has been a potential turning point. Polysilicon companies faced this crisis not only due to the financial downturn, but also because of internal mismanagement. When investors poured billions into the sector, they failed to accurately assess market demand and the pricing of downstream PV products. Additionally, their hydrogenation technology, R&D capabilities, product recovery rates, and cost control were still lagging behind established players like Wacker in Germany.
As global polysilicon prices dropped sharply, domestic companies struggled to keep up with rising costs, leading to a growing gap between price and production expenses. At the same time, foreign polysilicon firms with strong pricing power flooded the Chinese market, forcing local companies to cut back or stop production to minimize losses.
Some experts suggest that mergers and acquisitions could offer a lifeline. Wang Liusheng, an analyst at China Merchants Securities, pointed out that Zhongneng Silicon could acquire polysilicon companies in East China or purchase production lines in Sichuan and Chongqing. Through technological upgrades or introducing new methods like the silane process, they could lower costs for smaller firms.
A representative from Zhongneng Silicon told reporters that investing in technological upgrades might be cheaper than shutting down large-scale factories. Therefore, enterprise integration and shared technology are key paths to recovery.
However, the challenge of integration remains significant. Guo Wenjun, an analyst from Hou Wentao, noted that one of the biggest hurdles is the M&A price. In a shrinking market, sellers cannot expect high premiums—only a sale. This is not favorable for major shareholders who invested heavily in the sector.
Despite the difficulties, recent government policies on photovoltaics have brought hope to the industry. At a State Council meeting, it was emphasized that overcapacity should be adjusted through market mechanisms, and new production capacities must be strictly controlled. The development of distributed energy is also being promoted, expanding the market for residential, commercial, and community PV installations. Notably, during the 12th Five-Year Plan period, the goal of increasing domestic PV installation from 21 GW to 40 GW is expected to become a new policy.
Industry observers believe that with the continued growth of China's PV market, global PV installation capacity will likely rise, potentially signaling the revival of China’s polysilicon industry.Rectangle Ductile gratings are made of ductile iron; we make cast iron gratings on BS EN124 2015. The products are A15, B125, C250 and D400, They are used in Green belt, Pavement, Auxiliary road, Main road and Express way. We make Ductile Gratings all by producing line, the quality cast iron gratings is very good, and we warmly welcome customers all over the world to do business with us.
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