In late February of this year, when discussing the "cyclical" fluctuations in the PV sector, Liu Hanyuan, Deputy to the NPC, Vice Chairman of All-China Federation of Industry and Commerce, and Chairman of the Board of Directors of Tongwei Group, shared his insights with China Entrepreneur that "Unlike past cycles marked by supply-demand imbalances, this cycle is further complicated by accelerating technological iteration and international trade barriers."

Accelerating technological iteration is primarily reflected in the expansion of technical routes such as TOPCon, HJT, and BC. Notably, the PV technology has seen rapid iteration. Over the past two years, as PERC cell conversion efficiency has approached a bottleneck, N-type technologies such as TOPCon have surged and become a focal point for the sector.

"Innovation is a never-ending journey. The commitment to innovation is the eternal theme of corporate development and the fundamental guarantee for continuous growth and strengthening," said Mr. Liu Hanyuan.

Amidst the turbulent waves of PV technological innovation and cyclical fluctuations, Tongwei Global Innovation R&D Center is concentrating its efforts on the research and development of several cutting-edge PV technologies, aiming to provide robust technical support and momentum for the Company's medium- and long-term development. Currently, the Center has a comprehensive layout in the mainstream industry technologies of TOPCon, HJT, XBC, and Perovskite/c-Si tandem solar cells and modules. Mr. Liu Hanyuan believed that these technological innovations not only enhance the performance and quality of products but also create broad development space for the Company in future market competition.

How to quickly get out of the cycle? Mr. Liu noted that "It largely hinges on the velocity of our PV applications and the degree of global consensus on the energy transition. Of course, it also relies on the speed of new capacity addition in the sector and the elimination or marginalization of relatively backward capacity."

Here are the key points:

1. To achieve steady development, enterprises must have their own core technologies, continuously improve production data, develop soft power and facilities hand in hand, and improve the level of automation.

2. The pursuit of integration does not imply a neglect of specialization. It is essential to establish a commercial ecosystem with clear boundaries defining "what is permissible and what is not", fostering a "mutually beneficial relationship where each party supports the other".

3. Non-market production restrictions are, to a certain extent, one of the tools and means of modern market regulation.

4. If PV sector is compared to human growth, it is at most in the "teenage period" now, and problems it faces are only temporary.

5. Innovation is an important basis and prerequisite for enterprises to participate in international competition.

On characteristics of the "cycle"

China Entrepreneur: Could you walk us through the major shifts and pivotal moments in this cycle? What do you think is the most notable difference?

Mr. Liu Hanyuan: In fact, cyclical fluctuations are a common phenomenon across all sectors. When there's a shortage in any sector, prices typically rise. Similarly, increased demand and insufficient supply also drives prices upward. Under market conditions, price itself serves as a critical signal. It helps identify demand and prompts the reorganization of production to expand output and meet that demand. Following a sudden surge in demand, the pronounced upward momentum of prices, coupled with strong profitability and substantial profits, creates an investment demonstration effect. This attracts more investment and channels additional capital into specific segments or industries. Sooner or later, this results in overcapacity and excess production, marking the beginning of a new equilibrium cycle.

TW Solar Technology Hefei Base

China Entrepreneur: How does Tongwei judge and respond to the cycle?

Mr. Liu Hanyuan: In the face of sector cycles, for any sector and enterprise, only by carrying out their own responsibilities can they get well prepared for cyclical changes. The quality control capability of the entire PV sector is continuously improving, which puts higher requirements on the innovation and problem-solving capabilities of our team. For the steady development of our company, we must have our own core technologies, continuously improve our production data, develop our soft power and facilities hand in hand, and improve the level of automation, so that we can maintain our leading position in the sector.

Under the market economy, many sectors have their development cycles, and companies must understand the laws of the cycle during their development. When the sector is booming, they must be cautious and "prepare enough dry food" for more development opportunities when the sector faces a downturn. After years of development, the PV sector has laid a material and industrial foundation with considerable economic benefits. In fact, factors like product output, internal increment, the follow-up of the system and mechanism and the support of all sectors of society will all promote a healthier development of the sector.

China Entrepreneur: Reviewing the birth process of Tongwei's "integration" strategy, what is the underlying logic and the core problems to be solved, and how to evaluate the potential risks of such a model?

Mr. Liu Hanyuan: In the past two years, it has been believed that integration is the trend of the sector, so Tongwei has carried out extension to form a global supply chain with leading efficiency in scale cost, transaction cost and organizational cost in supporting coordination, and served and supported energy transition. However, the pursuit of integration does not mean neglecting specialization. Tongwei has always emphasized the importance of specialized division of labor and specialized partners, and advocated effective division of labor and cooperation in the sector, so that customers and peer companies can give display to their strengths, have more choices, expand their expertise scope, effectively cooperate with others with expertise, and rationally and appropriately control the company development to create a business ecology featuring "choosing wisely between what to do and what to avoid; returning good to kindness".

Therefore, in the polysilicon and cell links, Tongwei will unswervingly serve and support customers in their needs, maximize product quality, optimize costs, and contribute to a better sector ecology.

China Entrepreneur: How do you view the impact of the cycle on the sector?

Mr. Liu Hanyuan: In the face of short-term downturns, overcapacity and other problems in the sector, as long as we maintain the quality, level and ability of basic operation, we can calmly face the ups and downs of the sector and the market. In the past two to three years, the explosive investment and growth of the sector have played a positive role in promoting the energy transition of China and all mankind. From the perspective of the market, it was necessary and reasonable.

According to relevant institutions, to achieve carbon neutrality in 2050, the world needs to add an average of 1,500 to 2,000 GW of PV installed capacity each year. As of 2024, the world's new PV installed capacity was about 500 GW, and the cumulative installed capacity was about 2,000 GW, which is still a long way from the target installed capacity.

Therefore, compared with the future market size and the final required installed capacity, there should be 10 times, 20 times, or even more demand in the future. In fact, the development of the PV sector has just begun, and it is still in the early stage. If it is compared to human growth, it is at most in the "teenage period" now, and problems it faces are only temporary.

On "Solution" to the Cycle

China Entrepreneur: In the process of crossing the cycle, in addition to market behavior, what other paths has Tongwei explored, such as sector self-discipline?

Mr. Liu Hanyuan: Non-market production restrictions are, to a certain extent, one of the tools and means of modern market regulation. Western countries also have the OPEC agreement, which is a related mechanism for sector self-discipline and joint production restrictions to stabilize prices.

The self-discipline action initiatives in various links of the current sector cycle have effectively implemented policy requirements and played a positive role in ensuring product delivery quality and promoting high-quality and sustainable development of China's PV sector. We also require our team to fully participate in and support the implementation of sector self-discipline.

TW Solar's High-efficiency Module Intelligent Manufacturing Production Line

In fact, the sector is well facilitated to carry out related work, because based on China's global market share and cost advantages in PV, a slight adjustment of the strategy can create a win-win situation featuring "price increase, continuous maintenance of international competitiveness, and stronger ability to invest in R&D and reproduction" rather than an intense internal competition.

China Entrepreneur: In the response to the cycle, from an external perspective, there were not many major organizational changes, but have you promoted cost optimization internally? What were your main actions, and what are the results?

Mr. Liu Hanyuan: Thanks to the progress in technological R&D and refined management capabilities, our high-purity silicon product costs are significantly ahead of the sector, making us the world's largest high-purity silicon production company, with an annual production capacity of more than 900,000 tons and a national market share of about 30%, which has changed the global high-purity silicon sector competition landscape. In terms of cost control, through a series of refined management measures such as optimizing production processes, improving production efficiency and reducing energy consumption, the company has always maintained its cost advantage in the fierce market competition.

In terms of PV technology R&D, Tongwei has always followed the national strategy and put technological innovation at the top of corporate development. On February 21, Tongwei THC 210 high-efficiency heterojunction module power reached 783.2 watts, and the conversion efficiency exceeded 25.21%, successfully hitting a new height of 780 watts. This is the 10th time that Tongwei has refreshed the heterojunction module power and efficiency record since 2023.

On "Technological Innovation"

China Entrepreneur: With the advancement of PV technology, coupled with the current sector's severe low-price competition, there is a voice that "technology is no longer important in the PV sector". What do you think of that?

Mr. Liu Hanyuan: Technological innovation can give birth to new industries, new models and new momentum, and it is the core element for developing new quality productive force. However, this development process is not smooth sailing. Since its birth, China's PV sector has faced fierce competition from all over the world.

More than ten years ago, China's PV sector was in a situation where its market, core raw materials and core technologies were all behind the world level. In the process of development, it encountered the global financial crisis and the impact of "anti-dumping and anti-subsidy investigations" from Europe and the United States, and once fell into a development bottleneck period. Since then, with technological innovation as the key momentum point, China has kept strengthening its new energy industrial chain's innovation chain, expanding its industrial scale, promoting its technological iteration and upgrading, and upgrading its PV sector from "looking up" to its European and American counterparts to becoming the world's leader today.

Innovation is an important basis and prerequisite for enterprises to participate in international competition. In terms of continuous improvement of efficiency and R&D, continuous reduction of costs, and the effective expansion of scale, innovation plays an important role in promoting industrial development. Therefore, facing a new stage of development, Chinese PV companies must further strengthen scientific and technological R&D innovation, fight hard to overcome key core technology issues, and cultivate and develop new quality productive force, so as to help achieve global energy transition and carbon neutrality goals.