On ****, Cailian News reported (Editor Qi Ling) that the announcement of GCL Technology on Monday evening meant that there has been substantial progress in its silicon capacity layout in the Middle East.

According to GCL Technology's announcement, in May of this year, its wholly-owned subsidiary, GCL Technology (Suzhou) Co., Ltd., entered into a cooperation agreement with MDC POWER HOLDING COMPANY LLC, a wholly-owned subsidiary of Mubadala, a sovereign fund in the UAE. Both parties discussed the joint development of the UAE's first polycrystalline silicon production facility.

The announcement stated that according to the cooperation agreement, the company will continue to discuss the cooperative project with Mubadala and sign a legally binding investment agreement for the cooperative project.

In September of last year, Lan Tianshi, Co-CEO of GCL Technology, stated in an interview with foreign media that the company is seeking to build a factory in a Middle Eastern country with an annual output of 120,000 tons and plans to start production as early as 2025.

Regarding the site selection of the factory, he pointed out in the interview that Saudi Arabia has mature infrastructure and industrial manufacturing experience, as well as superior light conditions, and the local authorities also have the idea of ​​transforming from an oil-producing country to a solar power country.

However, the announcement last night indicated that the final site selection for the Middle East factory may fall in the UAE. This will be GCL Technology's first granular silicon project built overseas.

GCL Technology has already laid the groundwork in the 2023 annual report released at the end of April: China's photovoltaic industry is now leading the world, and going out to sea has become an inevitable trend for industry development. After two years of careful planning, the company's polycrystalline silicon project in the Middle East is expected to start construction in 2024.

Chairman Zhu Gongshan pointed out, "This strategic move aims to use low-carbon, low-cost, and high-quality granular silicon technology as the core to promote the upgrading of China's manufacturing industry to the high end of the value chain, gradually enhance the brand's international influence and reputation in the global layout, and contribute China's power to accelerate global energy transformation."

The Middle East is becoming a new investment hotspot.

After more than a decade of development, China's photovoltaic industry is undoubtedly the world's number one superpower, with more than 70% of global photovoltaic components coming from Chinese companies. However, this has been accompanied by frequent trade frictions. Anti-dumping investigations, increased trade tariffs and other measures are often used by European and American countries, forcing domestic photovoltaic companies to go abroad for development.

As a promising photovoltaic market, Chinese manufacturers are no longer satisfied with just providing photovoltaic products. Some companies have begun to consider investing and building factories locally. In recent years, the local government has continuously increased its investment in the field of renewable energy, providing a good development environment for the PV industry. At present, domestic manufacturers are evaluating or implementing investment and construction projects locally at every link.

In October 2023, TCL Zhonghuan announced that it had signed a joint development agreement with Saudi Vision Industries to jointly build a photovoltaic silicon wafer project in Saudi Arabia. The first phase of the project's target production capacity is expected to reach 20GW. Vision Industries was established in 2021 and is an industrial investment company dedicated to developing and investing in renewable energy projects in Saudi Arabia.

China has formed a complete photovoltaic industry chain, with strong capabilities in upstream silicon materials and silicon wafer processing, midstream solar cells and components, and downstream photovoltaic power plant construction and operation.

GCL and TCL Zhonghuan are leading enterprises in the upstream fields of silicon materials and silicon wafers. Moreover, both fields are capital-intensive industries, and the investment amount for a single project is tens of billions or even hundreds of billions of yuan. In the recent period, these two companies have coincidentally considered laying out in the Middle East. The synergy of the industrial chain is probably one of the important factors they are considering.

In addition to the upstream, midstream Chinese companies have also turned their attention to the Middle East market. Trina Solar signed a memorandum of understanding with ADPorts and Jiangsu Overseas Cooperation Investment Co., Ltd. for a UAE project in October last year. The planned capacity includes approximately 50,000 tons of high-purity silicon, 30GW of crystalline silicon wafers, and 5GW of battery components, which will be built in three phases.

Arctech Solar Holding (688408.SS), which provides brackets for photovoltaic systems, also plans to build a factory in Saudi Arabia. In April of this year, Arctech Solar signed a land lease agreement with the Saudi Industrial Cities and Technological Zones Management Bureau to secure project land for its Jeddah factory. The planned factory covers Arctech Solar's photovoltaic bracket production, and the comprehensive capacity after completion will reach 3GW.