TMTPOST -- "Brother, hold on, don't collapse." "Once the difficulties are over, spring will come."
At the age of 25, Li Jun runs a community for photovoltaic industry professionals in his spare time. Recently, cheering up his group members has become one of his main tasks, driven by widespread anxiety about the current situation and concerns for the future.
This winter has been particularly tough for ordinary photovoltaic industry workers, especially newcomers who have not been in the field for long.
The Disparity During the Transition Period
Li Jun studied mechatronics and joined a photovoltaic company in Jiangsu after graduating in 2021. He currently works as an equipment engineer at a module factory near Xuzhou City.
"Back then, recruitment and job-seeking in the photovoltaic industry were booming. Although my job doesn't seem high-end, it felt promising, and the pay was decent." According to Li, although his work is busy, he enjoys making friends in his spare time and has his own social media presence. Over time, this has formed a community, which, though not large, includes industry professionals from all over the country, mostly those who have entered the photovoltaic industry in recent years as "ordinary workers."
"Although I've only been in the job for a little over three years, there are many younger newcomers in the group. Many of my peers joined during the industry's peak, and adapting to the current somewhat bleak situation is indeed necessary," Li said.
In 2023, China's annual newly installed photovoltaic capacity surged to 216.88GW, with a year-on-year growth rate of 148.1%. The "accelerator" of this ultra-high-speed development period, which began in 2020, seems to have been pressed to the floor. Meanwhile, the upstream manufacturing industry's business conditions have been deteriorating, with the "price reduction wave" intensifying in the second half of last year.In the fourth quarter, losses among manufacturers became widespread, and by the first half of this year, both revenue and net profit of the top five companies in the A-share photovoltaic equipment sector declined year-on-year, with net profit declines all exceeding 68%. The former "number one photovoltaic stock" LONGi Green Energy saw a net profit decrease of 157.13% year-on-year, suffering a "blood loss" of 5.243 billion yuan in half a year. Other industry leaders like Tongwei Co., Ltd. also lost over 3 billion yuan. In the third quarter, "industry self-discipline" and "industry self-rescue" became buzzwords, with industry associations and relevant experts expressing the need to start with "anti-involution" and "avoiding price wars" to achieve healthy and sustainable industry development. However, at least in the short term, the pressure on the pricing side remains significant. For example, in the module segment where Li Jun works, the price of modules has dropped by nearly 30% since the beginning of this year, and compared to the high point in the first half of last year, it has fallen by more than 60%. Among the four main material segments (silicon material, silicon wafer, solar cell, module), this is still the smallest decline. According to the latest statistics from InfoLink, as of October 23, the lowest transaction price for monocrystalline PERC (182mm) modules was 0.65 yuan/W, the highest was 0.78 yuan/W, and the average transaction price was only 0.68 yuan/W. The average transaction price for N-type TOPCon modules, representing the new generation of technology, also fell to 0.71 yuan/W. This price is already below the cash cost line for many module manufacturers, leading to the aforementioned "tragic" losses.
Recently, the industry has been abuzz with the term "transition period," such as shifting from "rapid development" to "high-quality development" or from "scale first" to "efficiency first." Ji Zhenshuang, Deputy Director of the Beijing Jianheng Certification Center, mentioned at a recent roundtable forum that China's photovoltaic industry has achieved significant success over many years of rapid development but has also accumulated numerous issues. This year, the industry is discussing the problem of "wintering," indicating that contradictions have accumulated to a certain extent. Regardless of our willingness, reality will inevitably push us to the next stage of development.
In this sudden "gear shift and speed adjustment," as Li Jun mentioned, some practitioners may feel disappointed at the possibility of realizing their past expectations, while others may find themselves hesitating at the door.
Anxiety in the Cracks
Photovoltaics is a representative of the emerging manufacturing industry in recent years, with significant social influence, and the star-listed companies within it are particularly eye-catching. When the industry encounters difficulties, the public opinion surrounding some large enterprises is more likely to attract attention. In the past two years, layoffs and shutdowns have become "buzzwords" in the industry. Li Jun still remembers that from last winter until this year, the industry leader LONGi has been at the center of the "layoff storm." Although LONGi has repeatedly refuted the so-called "company plans to lay off 30%" and "layoff numbers may reach tens of thousands" as false information, to this day, posts from management trainees dissatisfied with the company not converting them to full-time positions under the pretext of "last-place elimination" and dismissals without compensation, as well as contract workers feeling unfairly treated, still exist on social media platforms.
As the overall business and financing situation of the industry weakens, the worry and anxiety about being laid off further spread, especially for those with little experience and unstable positions, the "working class." In the group Li Jun is part of, there is an employee from a production base around Beijing who lost his job due to company changes after less than a year of employment. Given the current situation, finding the next job is also not easy. In the group, he expressed somewhat dejectedly that he might return to his hometown for a while. For newcomers remaining in the industry, there is often a feeling of "struggling to survive."
Xiao Xin is an administrative staff member at a leading photovoltaic company, having worked there for about two years. "The work pace is quite fast, but administrative work feels quite stable, and the salary and benefits are considered decent locally."
However, with colleagues in the department being laid off from time to time since the end of last year, Xiao has been feeling "very anxious."
According to the analysis by Energy One, by the first half of this year, the number of employees in the photovoltaic industry is expected to exceed 2 million. However, tens of thousands have resigned, stopped working, or taken leave from core photovoltaic companies, with some major companies reducing staff by more than 8%. Besides, operators on production lines, who are most affected by operating rates and prone to layoffs, some companies have also laid off a significant number of functional staff to cut costs and streamline operations. Taking LONGi as an example, by the end of 2023, the company had a total of 75,000 employees, the most among all photovoltaic companies. However, last year, the number and proportion of its headquarters and functional staff significantly shrank, with finance and administrative staff accounting for 8% less of the total workforce year-on-year. According to this year's semi-annual report, LONGi is still streamlining operations, with management expenses down 18.8% year-on-year, and adjustments in functional lines are still ongoing.
Xiao noted that her work is currently busier, to the point of feeling numb, yet she always feels she lacks core competitiveness. Every time there are rumors of possible layoffs, she becomes extremely anxious, "not knowing whether tomorrow or layoffs will come first." The learning and improvement plan she had previously set is now completely neglected. Although some advised her to "find a new job first," she feels that her current energy and mindset do not support her in making any major decisions or changes.
"I just want to get through this winter, no matter what next year looks like." On social media platforms, Xiaoxin's anxiety and state are not unique. A blogger in the photovoltaic industry described feeling like they've "fallen into a crack" recently.
The Chill of the Long Winter
In Li's group, there has been a lot of focus on the performance of photovoltaic stocks recently, even though many may not actually hold these stocks. In late September and mid-to-late October, the photovoltaic sector experienced two rounds of strong overall gains, which group members see as at least a sign of industry recovery.
Indeed, recently many brokerage analysts such as those from Zhaoshang Electric New Energy and Western Electric New Energy have expressed optimism about the photovoltaic sector's counter-trend rebound. This optimism is partly due to the so-called industry's "self-rescue" efforts. On October 16, the China Photovoltaic Industry Association (CPIA) invited 16 leading companies to hold a special meeting to discuss preventing "involution" style vicious competition within the industry, strengthening the market's survival of the fittest mechanism, and smoothing the exit channels for outdated and inefficient production capacities. Following this, on October 18, the association issued another statement, indicating that bid prices lower than costs have become a problem troubling the photovoltaic manufacturing industry, stating that after calculations, the current integrated enterprise N-type M10 double-glass photovoltaic modules, without considering depreciation, and excluding tax on silicon materials, silicon wafers, and cells, have a final production cost including tax (excluding transportation and miscellaneous fees) of 0.68 yuan/W, emphasizing that bidding below cost is suspected of being illegal. The market generally interprets this as the industry association setting a "bottom line" for bidding prices, but there are also doubts about the effectiveness of this "guidance price." Besides the association's binding and enforcement effects, there is also controversy over how to reference photovoltaic modules other than N-type M10 double-glass. The association stated that it will continue to regularly investigate and calculate industry costs and publish them for the reference of the entire industry and government regulatory departments.
In addition, some industry experts and company executives have expressed dissatisfaction with the association's intervention, with some considering it a "non-market" approach, and others believing that guidance based only on the opinions of leading industry companies is not well-suited for many small and medium-sized manufacturers.
Regarding how the industry should clear out, Zhang Sen, Secretary-General of the Photovoltaic Branch of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, previously stated that eliminating outdated production capacity through market competition and completing mergers and reorganizations is the general trend of the photovoltaic industry and the most effective method.
In the fierce market competition, whether it is "long pain" or "short pain," those "workers" who have not yet found their footing may find themselves at the coldest door, enduring the most piercing chill and pain. In the current situation where it is difficult to take the initiative, many can only hope that both the industry and themselves will get through the winter season more quickly.
However, can next spring truly become a warm spring for the photovoltaic industry? At least for now, the expectation that the industry would clear out and reach a turning point from the fourth quarter of 2024 to early 2025, which still existed in the first half of this year, has almost "disappeared." From a pessimistic viewpoint on downstream demand, the situation of continuous price decline and operational pressure on manufacturers may persist until the fourth quarter of next year, or even later. (The names Li Jun and Xiao Xin in the text are pseudonyms) (Author｜Hu Jiameng, Editor｜Liu Yangxue)
