China’s Leading Polysilicon Producers Join Forces to Reduce Overcapacity and Stabilize Prices

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Nine major Chinese producers of solar-grade polysilicon, including Tongwei Group and GCL Group Holdings, have established a joint venture to reduce outdated manufacturing capacity within an industry currently facing intense price competition and financial losses.

The new partnership aims to foster collaboration among photovoltaic companies, focusing on advancing technology, expanding markets, and optimizing costs and production capacity, according to a knowledgeable source.

Based in Beijing, Guanghe Qiancheng Technology was created with a registered capital of 3 billion yuan (approximately $425 million). It was formed by the nine companies along with a wholly owned entity of the China Photovoltaic Industry Association. Tongwei and GCL collectively hold nearly half of the venture’s equity.

Solar polysilicon prices hit an all-time high in August 2022 before collapsing due to the influx of new capacity. This oversupply triggered a brutal price war, with spot prices dropping nearly 90% from their peak by July this year—the lowest point recorded.

Following the announcement of the joint venture, spot prices for polysilicon began rebounding. By December 8, they had increased to around 52,000 yuan ($7,362) per ton, representing an approximate 50% rise from the multi-year low of about 34,700 yuan noted in July.

The Chinese solar industry is actively working to balance supply and demand by gradually shutting down obsolete production facilities, a strategy aimed at ending destructive price wars, explained Liu Yiyang, the executive secretary-general of the China Photovoltaic Industry Association, last month.

Hou Yicong, founder of Chunquan Capital, has been appointed as the legal representative of the joint venture, according to corporate data provider Qichacha. Hou previously worked for seven years at ShineWing Certified Public Accountants as a project manager and has experience in post-investment management at IDG Capital and JD Capital.

Ownership shares in the joint venture are distributed with Tongwei holding an indirect stake of 30.35%, GCL holding 16.79%, and other investors—East Hope, Daqo Energy, Xinte Energy, and Asia Silicon Qinghai—each owning between 7.79% and 11.3%. The remaining three firms and a subsidiary of the China Photovoltaic Industry Association have smaller stakes.