Losses! Layoffs! How Much Will The Reduction in Production of Silicon Wafers of Various Sizes Impact?

The industry-wide continuous decline in silicon wafer prices is akin to a dynamic tug-of-war between buyers and sellers.

According to China Silicon Industry data, in the recent week (March 21 to March 27), the prices of industrial silicon spot prices continued to decline:

M10 monocrystalline silicon wafer (182mm/150μm) average transaction price dropped to ¥1.76/piece, a weekly decrease of 2.22%;

N-type monocrystalline silicon wafer (183.75mm/130μm/256mm) average transaction price dropped to ¥1.70 /piece, a weekly decrease of 7.10%;

G12 monocrystalline silicon wafer (210mm/150μm) average transaction price dropped to ¥2.55/piece, a weekly decrease of 3.41%.

Affected by last year's blind capacity expansion, silicon wafer prices have continued to decline in the first quarter of 2024. On the one hand, it is difficult for the downstream demand side to increase rapidly in the short term; on the other hand, upstream silicon material suppliers have limited room for profit margins. This results in faster and greater price drops for N-type silicon wafers, which are performing relatively well in the market.

At the beginning of 2024, the global photovoltaic industry almost simultaneously saw news of layoffs, losses, and price reductions. This includes many upstream industrial silicon major producers and silicon wafer manufacturers.

In fact, silicon wafer manufacturers of various sizes have basically entered a phase of cyclical losses. The loss in the N-type is relatively evident due to a significant excess capacity. According to an InfoLink survey, the inventory of silicon wafers in the industry has accumulated to approximately 3.3 to 3.5 billion pieces, with N-type M10 specifications being the majority.

From the supply side, three companies have successively announced production reduction plans, which significantly affect output. Several tire 1 silicon wafer companies in China have reduced their operating rates to around 80%.

From the demand side, persistent high production planning and the continuous accumulation of inventory have created immense sales pressure. Even though there is huge potential for market expansion in the long term, it is difficult to quickly absorb such a large backlog of inventory in the short term.

As a result, silicon wafer prices are rapidly collapsing, and the industry is experiencing a phase of supply-demand imbalance. Although some earlier orders are still being executed, the average price has continued to decline, and current transactions are primarily focused on clearing previous inventory.

Currently, institutions hold divergent views. Some believe that the current market sentiment is pessimistic, with inventory backlog issues stemming from overcapacity; while others believe that this is only a temporary pressure, and the industry has begun taking measures to adjust, implying that prices cannot continuously decline. Although high inventory still needs to be cleared, the current prices are at the bottom, with limited further downside potential, and the overall photovoltaic market remains positive.

This ongoing industry turbulence has further sparked fluctuations in the global photovoltaic market's public opinion. For European solar manufacturers and emerging production startups, they are currently unable to compete with Chinese import prices, which have reached historically low levels during cyclically oversupplied situations. As the oversupply cycle emerges, the European Union is attempting to support the revival of local solar manufacturing through various financing tools and may impose tariffs on imported photovoltaic products.

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