China’s Solar Price War Keeps Longi in the Red

1. Longi Green Energy Technology Co. Ltd. (601012.SH) continued its losses into Q1 2026 due to overcapacity and price competition in China's photovoltaic industry.[para. 1] In 2025, revenue declined 14.8% to 70.4 billion yuan ($10.3 billion), with a net loss of 6.4 billion yuan, marking the second straight year of losses. Q1 2026 revenue fell 18% year-over-year to 11.19 billion yuan, widening net loss to 1.92 billion yuan.[para. 2]

2. Longi's ongoing losses highlight a supply chain crisis, with Chinese capacity nearly double global demand amid slowing growth and trade barriers.[para. 3] Chairman Zhong Baoshen noted intensified supply-demand imbalance, prices near costs, and Q4 2025 rises in raw materials like silver paste.[para. 4]

3. Despite cost cuts, margins stayed thin: solar module and cell gross margin was 0.19% in 2025, down 6.08 percentage points year-over-year; wafer and silicon rod gross margin was -5.3%, an improvement.[para. 6][para. 7] Domestic market (55.3% of revenue) dragged with -3.4% margin, while overseas markets were profitable (4.4% Asia-Pacific to 8.4% Europe).[para. 8]

4. Inventory buildup was evident: silicon wafer output hit 115.7 GW at 60.6% utilization, but sales were only 48 GW, surging inventory 136%; module output was 72.6 GW at 59.7% utilization, sales 82 GW (including processing), inventory up 11.3%.[para. 9] Operating cash flow turned positive at 4.4 billion yuan, aided by lower raw material and compensation outflows.[para. 10]

5. The solar sector faces painful restructuring after three years, with China's capacity double global demand; by end-2025, polysilicon, wafers, cells, and modules capacity surged 3-6 times from 2020, holding 80-90% global share.[para. 11][para. 12] MIIT official Wang Shijiang stated in Feb 2026 the industry is in deep adjustment with unresolved supply-demand issues, prioritizing curbing excessive competition.[para. 13]

6. Peers suffer too: Tongwei (600438.SH) projects 9-10 billion yuan loss after 7 billion in 2024; TCL Zhonghuan (002129.SZ) lost 9.3 billion yuan; Trina Solar (688599.SH) expects up to 7.5 billion yuan loss, nearly double prior year.[para. 14]

7. Demand is slowing: China new installations expected to drop 24-43% in 2026, first decline in seven years; global installations may fall 0.7% to 648 GW per BloombergNEF due to policy shifts and saturation.[para. 15][para. 16]

8. Overseas risks mount: Europe installations down 0.7% to 65.1 GW in 2025 (first in decade); U.S. down 14% to 43.2 GW amid policy changes, tightened restrictions on Chinese-linked SE Asia production, and “One Big Beautiful Bill Act” phasing out subsidies.[para. 17] Emerging markets like India, South Africa, Turkey, Saudi Arabia, Brazil impose tariffs, anti-dumping, local content rules; firms shift to near-shore, asset-light models.[para. 18]

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