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Home China disrupts the photovoltaic market by selling solar panels at cost. Now, their companies are suffering: LONGi, the world's largest manufacturer, lays off 4.000 and profits fall 44%. Find out how China faces the photovoltaic crisis

China disrupts the photovoltaic market by selling solar panels at cost. Now, their companies are suffering: LONGi, the world's largest manufacturer, lays off 4.000 and profits fall 44%. Find out how China faces the photovoltaic crisis

18/05/2024 às 23:28
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Crisis in China's solar industry: LONGi lays off 4.000 employees and faces 44% drop in profits. Learn more about overproduction in the photovoltaic market

Crisis in China's solar industry: LONGi lays off 4.000 employees and faces 44% drop in profits. Learn more about overproduction in the photovoltaic market

The Chinese photovoltaic market has officially entered a crisis. LONGi, the biggest manufacturer of solar panels in the world, will lay off 4.000 employees after making 44% less profit in the third quarter of 2023. Overproduction and overly aggressive competition are suffocating its finances.

Rumors and denials

Alarms sounded when the Bloomberg published that LONGi planned to cut almost a third of its workforce. The article spoke of a workforce of 80.000 employees, which began to decline in November with the layoff of thousands of people, mainly management interns and factory workers.

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On Tuesday, the company softened the rumors, announcing that it would lay off 5% of its workers, about 4.000 employees.

LONGi, the world's largest manufacturer, will lay off thousands of people as its stock collapses

Overproduction led China to cancel projects equivalent to 70 GW of capacity.

A turning point after years of growth

For LONGi, this is the first stumble after dizzying expansion across the world. The company's profits fell 44% in the third quarter of 2023 and the stock fell 70% from its all-time high in 2021. In October, the company said it had “made a mistake” by not being aggressive enough with pricing. On Tuesday, he explained that “the photovoltaic market faces an increasingly complex and competitive environment”.

Selling at cost price

China managed to make the entire world dependent on its solar technology in three steps:

  1. A public investment of hundreds of billions of dollars;
  2. High profit margins that manufacturers have taken advantage of for years to improve their technology and widen the gap with the West;
  3. And fierce internal competition which, together with overproduction, caused a drop of more than 50% in the price of Chinese modules.

The explosion of oversupply in the photovoltaic market

In China alone, intense overproduction led to the cancellation of projects equivalent to 70 GW of capacity, especially P- and M6-type cells, whose demand will continue to fall in the coming years.

However, China has a competitive advantage even in this context as it plans to build more than 1000 GW of N-type cell capacity, the next generation technology that will succeed P-types. Its manufacturing capacity is 17 times that of the rest in the world and could cause a new peak in the market by 2025.

The LONGi advantage

Chinese companies LONGi, Jinko, Trina Solar and AE Solar dominate 80% of the global photovoltaic market, but it is precisely LONGi that has the best chance of overcoming the crisis.

It is the largest company in the photovoltaic market, has achieved efficiency records with next-generation technologies such as perovskites, and is sitting on a mountain of cash: around 7,4 billion dollars, much more than most of its competitors.

Image: LONGi

Source: Bloomberg

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