Tongwei Co., Ltd.: Prices in key segments of the PV industry chain rebounded in August, and the market environment is expected to improve further next year.

SMM, September 17: Recently, Tongwei Co., Ltd. released its September investor activity record. When discussing the national anti-involution policies, Tongwei stated that 2026 marks a period of intensive implementation of "anti-involution" policies in the PV industry, with effects gradually transmitting from the expectations level to fundamentals. Particularly since H2, three mandatory national standards, including the *Energy Consumption Limits per Unit Product for Polycrystalline Silicon and Germanium*, were issued in June. Enterprises in the industry now face strict production energy consumption red lines and product energy efficiency thresholds. Once officially enforced next year, outdated capacity is expected to be phased out gradually. In July, the group standard *General Rules for Cost Accounting Models in the PV Industry* was subsequently released, which will put an end to the disorder of inconsistent cost accounting standards across the industry and establish a set of benchmarkable, verifiable, and implementable measurement standards. Following that, industry regulatory authorities held price compliance guidance meetings, requiring enterprises to conduct self-inspection and self-correction in accordance with the group standard and maintain market price order. Driven by these positive policies and the marginal recovery of installation demand in China and overseas in H2, prices of the company's main products across key segments rebounded in August, and operating conditions improved. However, stock prices are influenced by multiple factors, including market capital style and trader sentiment, so investors are advised to be mindful of risks.

Meanwhile, investors also asked how much of the company's current polysilicon capacity complies with the latest energy consumption standards. Tongwei stated that all of its high-purity polycrystalline silicon projects are industry-leading advanced capacity, with various consumption indicators consistently leading the industry. Currently, all of its capacity meets the Level 3 energy consumption standard under the newly issued *Energy Consumption Limits per Unit Product for Polycrystalline Silicon and Germanium*.

As for the pressure on net profit in Q2, Tongwei responded that the pressure on the company's net profit in Q2 was mainly due to the fact that industry supply and demand had not yet fully recovered, and product prices along the industry chain remained persistently low. With the continued implementation of policies to curb involution in the industry, prices of major products along the industry chain have recently shown a marginal rebound. Going forward, as the new national energy efficiency standards are implemented, outdated capacity in the industry will gradually exit the market, and the supply-demand pattern is expected to continue improving. The company will continue to deepen cost reduction and efficiency improvement, consolidate its core advantages in technology, cost, and product quality, and as industry prosperity gradually recovers, the company's profitability is expected to improve steadily.

Investors also asked about the recent price increases across multiple segments of the PV industry chain, especially polysilicon. When asked about the reasons, Tongwei stated, since August, the increase in upstream polysilicon prices has mainly benefited from the strong promotion and implementation of China's "anti-involution" policies, as industry enterprises actively moved away from the vicious competition environment of low prices and guided prices toward a reasonable rebound. Meanwhile, driven by phased demand in China and overseas, prices of key downstream segments rebounded to varying degrees.

According to SMM spot quotes, taking N-type dense polysilicon prices as an example, spot quotes have been drifting lower since August. As of September 17, N-type dense polysilicon prices rose to 38.5-42 yuan/kg, with an average price of 40.25 yuan/kg, up 9.25 yuan/kg from 31 yuan/kg at end-July, an increase of 29.84%.

Regarding the Q3 operating rate and Q4 production schedule this year, the company responded:In Q3, the company's operating rates across all segments remained cautious and orderly overall. On the polysilicon side, with the arrival of the southwest rainy season, the company's comprehensive operating rate has rebounded since June, but overall it still follows the principle of "orderly production control." In the subsequent dry season, production configuration will be dynamically adjusted based on cost factors, market conditions, and other comprehensive factors. On the cell and module side, the company will follow the "produce based on sales, efficiency first" approach in Q4, flexibly adjusting according to order pace.

Regarding progress in overseas PV capacity construction, Tongwei stated that since PV power generation has become the most economical form of energy in most countries and regions globally, along with its green, safe, and highly adaptable attributes, and given that PV penetration rate remains relatively low, PV installation scale is expected to maintain medium-to-high growth over the long term. Although in recent years some countries and regions have imposed trade barriers on China's PV products to support local capacity, the vast majority of countries and regions still maintain an open and positive attitude toward Chinese PV products. In addition, China's PV industry chain has long maintained global leading advantages in technology, scale, cost, and quality, and its position as the world's largest PV product exporter remains solid. The company has long adhered to technology R&D, refined management, and prudent operations, and has provided high-quality PV products to more than 90 countries and regions to date. The company will continue to closely track overseas PV markets and dynamically and prudently evaluate the necessity and feasibility of capacity investment.

Tongwei stated that in H1 this year, the company landed multiple large benchmark projects in core European markets such as Romania and Poland, achieving YoY growth in overseas module sales, with the proportion rising to nearly 40%. Looking ahead, global PV installation demand still has broad growth potential amid the energy transition trend. The European market continues to expand, while emerging markets such as the Middle East and Africa are rising rapidly. The company will continue to deepen strategic cooperation with core power station developers and distributors outside China, while accelerating the layout of its global marketing network to further enhance brand influence in overseas markets.

Regarding the forecast of when the company's capacity rationalization will bottom out, Tongwei stated that although the supply-demand imbalance across the industry chain has not significantly eased at this stage, prices in key segments of the industry chain have already rebounded in August, driven by the recent "anti-involution" policies and marginal improvement in demand both in China and overseas. With the official implementation of national standards on energy consumption and energy efficiency starting January next year, outdated capacity in the industry will gradually exit the market, and the market environment is expected to improve further. The pace of subsequent capacity rationalization will need to be observed through supply-demand dynamics.

When discussing the forecast for PV installation demand next year, Tongwei stated that in China, 2026 is the opening year of the "15th Five-Year Plan." Affected by factors such as adjustments to the mechanism-based electricity pricing policy, installations in China saw a pullback in H1 from a high base, but this adjustment is a phased characteristic of the industry's transition from scale expansion to high-quality development, rather than a trend decline. According to forecasts from the China Photovoltaic Industry Association (CPIA), new installations in China will pull back to 180-240 GW in 2026, while average annual new installations in China during the "15th Five-Year Plan" period are expected to rebound to 238-287 GW, meaning the Chinese market is expected to achieve recovery growth in 2027 from a low base.

Outside China, regional divergence has further intensified. The European market is slowing down but maintaining growth resilience, while emerging markets such as the Middle East, Africa, and Southeast Asia continue to grow rapidly, becoming the core growth drivers of global PV installations. Overall, global PV installations are expected to see a mild recovery in 2027 after the adjustment in 2026, with the installation baseline steadily rising. In the medium and long term, the demand logic for PV has not changed; rather, it continues to strengthen. The global energy transition trend is certain, and PV, with its continuously declining levelized cost of electricity, has become the most economical mainstream clean energy source. More notably, the AI computing power revolution is creating a new demand growth driver. Global data center electricity demand is surging, and the combination of PV and energy storage can provide green, economical power solutions for computing centers, which is expected to become an important growth space for the "PV+" model.