Core Viewpoint - The photovoltaic industry is facing significant losses, with major companies like Longi Green Energy, Tongwei Co., and Aiko Solar all forecasting substantial net losses for 2025, indicating a challenging market environment driven by overcapacity and rising raw material costs [1][2]. Group 1: Company Performance - Longi Green Energy expects a net loss of approximately 60 billion to 65 billion yuan for 2025, citing increased costs of silver paste and silicon materials as key factors [1]. - Tongwei Co. is projected to incur a net loss of 82 billion to 96 billion yuan for 2025, with product prices remaining low and insufficient cost transmission impacting profitability [1]. - Aiko Solar anticipates a net loss of 45 billion to 48 billion yuan for 2025, while TCL Zhonghuan expects a loss of 12 billion to 19 billion yuan, both companies highlighting the impact of structural overcapacity on their operations [2]. Group 2: Industry Trends - The photovoltaic sector has experienced nine consecutive quarters of losses since Q4 2023, with ongoing supply-demand imbalances exacerbating the situation [2]. - Industry experts emphasize the need for capacity clearing and structural optimization, suggesting that companies must move beyond simple production cuts to enhance competitive advantages through technology and product differentiation [2]. - TCL Zhonghuan's acquisition of Yida Energy marks a significant step towards industry consolidation, aiming to optimize resources and foster collaboration, which could help the sector transition from low-level competition to value co-creation [2].

Investment Rating - The report maintains a "Buy" rating for several companies including NAURA, SICC, SUMCO, Shin-Etsu Chemical, Mitsubishi Electric, and Infineon [2]. Core Insights - The report highlights significant growth in local production and demand for silicon wafers and SiC substrates in China, with local coverage expected to increase from 41% to 54% for 12-inch silicon wafers and from 80% to 87% for 6-inch SiC substrates by 2027E [1][6]. - Pricing trends indicate a decline in average selling prices (ASP) for 8-inch silicon wafers at a CAGR of -10% from 2024 to 2026E, while 12-inch wafers are expected to decline at -6% CAGR during the same period. SiC substrate ASP is projected to decrease from US$443 in 2024 to US$384 in 2026E [1][6]. - Capacity expansion is notable, with 12-inch silicon wafer capacity expected to grow at a CAGR of 21% from 2024 to 2027E, significantly outpacing the 3% CAGR for 8-inch silicon wafers. SiC substrate capacity is also set to expand at 26% and 96% CAGR for 6-inch and 8-inch substrates, respectively [1][6]. - The report anticipates a consolidation in the industry, with the top three Chinese silicon wafer suppliers projected to cover 36% of domestic demand by 2027E, up from 26% in 2024 [1]. Summary by Sections China TAM - The total addressable market (TAM) for silicon wafers in China is projected to grow from US$1.999 billion in 2021 to US$4.511 billion by 2030E, with a notable increase in shipments from 36,962k units in 2021 to 103,570k units by 2030E [37]. - The SiC substrate market is expected to grow from US$197 million in 2021 to US$2.770 billion by 2030E, driven by rising EV penetration and SiC adoption rates [39]. - The GaN devices market is projected to expand from US$66 million in 2021 to US$1.611 billion by 2030E, supported by applications in EVs, data centers, and consumer electronics [42]. Supply and Demand Dynamics - Local suppliers' capacity expansion in silicon wafers is primarily driven by logic and memory clients, while SiC substrate capacity is expanding due to increased adoption in EVs and fast charging technologies [43]. - The report notes that local suppliers are expected to cover 75% of SiC substrate demand in China by 2025E, increasing to 84% by 2027E [6][39]. - The demand for SiC and GaN is anticipated to replace IGBT in high power and high frequency applications, with SiC penetration rates projected to reach 75% in EVs by 2030E [52]. Pricing Trends - The ASP for silicon wafers is expected to decline, with 8-inch wafers decreasing at a CAGR of -10% and 12-inch wafers at -6% from 2024 to 2026E [1][6]. - SiC substrate pricing is also expected to narrow, making SiC MOSFETs more competitive against silicon IGBTs [1]. Industry Consolidation - The report indicates a trend towards consolidation in the silicon wafer industry, with the top three suppliers expected to significantly increase their market share in China by 2027E [1].