Longi(SH:601012) Zhong Guo Jing Ying Bao·2025-10-12 06:22Core Insights - The photovoltaic industry is facing severe "involution" issues, characterized by irrational price competition due to supply-demand imbalances, leading to widespread losses among companies [1][2] - The Ministry of Industry and Information Technology emphasizes the need for industry governance to prevent non-rational competition from destroying enterprises and the industry [1] - Efforts to combat "involution" have begun to show results, but challenges remain in clearing excess capacity and improving supply-demand relationships [2] Supply-Demand Imbalance - The root cause of "involution" is the supply-demand imbalance, exacerbated by aggressive expansion from some companies and blind project approvals by local governments since 2020 [1] - The China Photovoltaic Industry Association projects that by 2024, global capacities for polysilicon, silicon wafers, battery cells, and modules will reach 3.249 million tons, 1394.9 GW, 1426.7 GW, and 1388.9 GW respectively, while new installations will only be 530 GW [1] Industry Losses - Since Q4 2023, some photovoltaic companies have reported losses, which have quickly spread throughout the entire industry chain, resulting in an industry-wide loss situation [2] - The "anti-involution" actions initiated in H2 2024 include industry self-discipline, production cuts, and price controls to prevent sales below cost [2] Challenges in Capacity Clearance - The difficulty in clearing excess capacity is attributed to coordination challenges among private enterprises, local government protections, and unclear exit regulations [2] - Local governments face pressures related to employment and tax revenue, complicating their ability to implement necessary reductions in capacity [2] Standards and Quality Improvement - National authorities are promoting standards to enhance competition thresholds and accelerate the exit of outdated capacities [3][4] - The introduction of new energy consumption standards is expected to significantly improve the supply-demand landscape for polysilicon [4] Technological Innovation - In a market characterized by widespread losses, companies must shift from "involutionary" low-price competition to value-driven competition through technological innovation [6] - Companies like Longi Green Energy emphasize the need for increased R&D investment and original technology breakthroughs to transition from a manufacturing hub to an innovation hub [6] Intellectual Property and Market Dynamics - The current expansion and technological homogenization in the photovoltaic sector are partly due to weak intellectual property awareness [7] - Companies are increasingly focusing on technology licensing and cross-licensing to create a more orderly market competition [7] Product Differentiation and Market Strategy - Companies are adopting differentiated strategies, such as JinkoSolar's product iterations to enhance power output and achieve sales premiums [7] - Longi Green Energy and Aiko Solar are focusing on BC technology for competitive differentiation, with Aiko reporting a 400% year-on-year increase in ABC component shipments in H1 2025 [7]