China’s Solar Manufacturers Face Slow Recovery Despite Margin Gains
China’s solar manufacturing industry is showing signs of stabilization, but its latest financial results indicate that a broad recovery remains some distance away. LONGi Green Energy Technology, Jinko Solar, Trina Solar and Tongwei reported combined quarterly net losses of 4.63 billion yuan, according to Bloomberg’s November 2 report, republished by The Edge Malaysia.
Better margins at some companies suggest that efforts to reduce excessive competition are having an effect. However, persistent oversupply continues to restrict manufacturers’ ability to restore profitability.
Losses Narrow Without a Sector-Wide Turnaround
The distinction between quarterly improvement and a sustained recovery is clear in the latest results. Caixin reported that six major manufacturers, including JA Solar Technology and TCL Zhonghuan Renewable Energy Technology alongside the four companies above, recorded combined third-quarter losses of nearly 7 billion yuan. That compared with approximately 5.9 billion yuan a year earlier.
Separate reporting by Yicai showed that several manufacturers reduced their losses compared with the second quarter. Tongwei’s third-quarter loss narrowed by 39%, while LONGi’s fell by 42%. JA Solar and TCL Zhonghuan also reported sequential improvements.
Cash generation provided another sign of progress. Jinko Solar generated 3.1 billion yuan in operating cash flow during the third quarter, while Tongwei recorded positive operating cash flow for a second consecutive quarter. LONGi’s operating cash flow moved back into positive territory.
These developments indicate that operating conditions can improve before companies return to net profit. They also underline why individual quarterly results need to be assessed alongside longer-term earnings and balance-sheet trends.
Excess Supply Continues to Limit Pricing
The industry’s central difficulty remains the gap between available production and demand. Bloomberg reported, citing BloombergNEF, that polysilicon inventories reached 600,000 tonnes in August, sufficient for more than six months of global wafer production.
This imbalance extends beyond a single manufacturing stage. The International Energy Agency’s Renewables 2025 report estimated that global module manufacturing capacity reached 1,100–1,350 gigawatts in 2024, more than twice annual deployment. Potential output across the solar manufacturing chain had more than quadrupled between 2021 and 2024.
The implication is that small improvements in sales or factory efficiency may be insufficient to restore healthy industry-wide returns. When substantial spare capacity remains available, suppliers face continued pressure to compete for orders. A durable adjustment therefore depends on how production, inventories and demand evolve together.
Domestic Demand Shows a Mixed Picture
China’s installation figures illustrate why the recovery is difficult to judge. Bloomberg reported that additions fell 54% in the first nine months of 2026 compared with the same period a year earlier.
However, Bernreuter Research’s analysis of National Energy Administration data identified a third-quarter improvement. China installed 38.76 GW of solar capacity between July and September, measured on an alternating-current basis, up 38.1% year on year.
That quarterly increase followed four quarters of annual declines. Even so, installations remained 33.6% below the third-quarter level recorded in 2024.
Bernreuter linked the earlier downturn to China’s introduction of market-based remuneration for solar electricity in June 2025. The figures suggest that demand has recovered from a low point, while remaining weaker than during earlier periods. A positive quarterly comparison therefore does not establish that manufacturers’ excess capacity has been absorbed.
Technology and Product Mix Affect Margins
LONGi’s first-half results provide an example of how individual manufacturers are trying to improve their position. The company reported sales of 19.55 GW of back-contact modules, up 125% year on year and representing more than 65% of total module shipments.
It also reported that overseas markets accounted for more than 65% of module revenue. According to LONGi, changes in its shipment mix helped its first-half gross margin return to positive territory.
Nevertheless, the company identified several continuing pressures, including low capacity utilization, higher silver costs in the first quarter, and foreign-exchange losses.
This highlights the difference between stronger demand for particular products and recovery across the whole manufacturing sector. A manufacturer can improve its commercial position through technology and market selection while still facing substantial financial pressure.
Implications for Solar Buyers and the Energy Transition
For developers and corporate electricity buyers, the practical implication is that equipment pricing should be considered alongside supplier resilience. Procurement assessments can examine financial performance, delivery commitments, warranty arrangements, and access to replacement equipment.
Low module prices can support project economics, but project viability also depends on grid access and the value of electricity produced. LONGi identified grid integration constraints and uncertainty over project returns under electricity-market reforms as factors affecting Chinese demand.
The International Energy Agency Photovoltaic Power Systems Programme’s 2026 market report similarly highlights the growing importance of storage and system integration. It found that manufacturing overcapacity persisted in 2025, even as global solar installations continued to expand.
Taken together, the evidence points to an uneven adjustment. Better margins and improving cash flow offer signs of progress, but a lasting recovery will require manufacturers to align output more closely with demand and electricity systems to accommodate further solar deployment.
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