CNBC AI News, July 9 — TCL Zhonghuan has issued a profit warning projecting first-half net losses of 4-4.5 billion yuan ($550-620 million), a significant widening from last year’s 3.064 billion yuan shortfall. The forecast underscores the intensifying headwinds buffeting China’s solar sector amid a deepening supply glut.
The silicon wafer giant acknowledged resilient global photovoltaic demand through early 2025, noting a temporary installation surge in China’s distributed solar segment drove periodic market strength. However, momentum sharply reversed heading into May-June as cooling demand converged with severe supply-demand imbalances across the manufacturing value chain.
Persistent inventory build-up triggered accelerated price erosion across core products. TCL Zhonghuan explicitly cited plunging selling prices coupled with inventory impairment charges as primary drivers of its projected operating loss.
As the bellwether in photovoltaic silicon wafers, TCL Zhonghuan’s financial distress serves as a critical industry barometer. The solar sector’s current turmoil follows years of hyper-expansion fueled by policy tailwinds and speculative investments. Observers note excessive capacity build-outs have structurally outpaced actual market needs.
Data from the China Photovoltaic Industry Association reveals total manufacturing capacity now stands at 180% of actual demand—a fundamental imbalance exacerbating cutthroat competition. This oversupply crisis has already triggered corporate failures and accelerated industry consolidation.
Regulatory intervention may offer a lifeline. Beijing’s Ministry of Industry and Information Technology convened an emergency summit with major manufacturers on July 3, signaling intentions to curb “disorderly” price competition and accelerate obsolete capacity retirements.
Industry analysts suggest this reset could ultimately strengthen the sector. If implemented effectively, the structural consolidation—paired with renewed focus on next-gen technologies—may position survivors for profitable growth in a more disciplined post-shakeout landscape.
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