According to the app of Zhitong Finance, Huatai Securities released a research report saying that on June 15, 2024, the five-day photovoltaic SNEC exhibition in Shanghai came to an end. According to the new energy daily, more than 3600 companies participated in the exhibition, which is the largest scale in years. In contrast, the supply and demand imbalance has led to a decrease in prices of industry chain products and intensifying competition, which puts pressure on the industry clearance. Currently, the industry chain is under an abnormal low-profit level, and some small enterprises with relatively backward production technology and scale have stopped production or seen a decline in production rate, indicating the trend of industry clearance. In addition, new technologies emerge frequently at this year's SNEC, and the industry chain under the background of “internal integration” hopes to find a breakthrough through more cost-effective new technologies. If new technologies related to cost reduction and efficiency increase are successfully industrialized, it is expected to accelerate the clearance of old production capacity.

On the demand side, according to the National Energy Administration, China's newly added photovoltaic installed capacity in January-April 2024 was 60.11 GW, a YoY increase of 24.43%. Domestic market demand for installed capacity continues to grow. Globally, considering the significant cost advantage of photovoltaic power generation, Huatai Securities predicts that global photovoltaic installed capacity will still maintain a high growth rate, with more than 530 GW installed in 2024, a YoY increase of more than 20%. Specifically, the European and American markets are expected to see relatively bright growth: according to the U.S. Energy Information Administration (EIA), the United States is expected to add 44.7 GW of new photovoltaic installed capacity in 2024, a YoY increase of more than 30%. Huatai Securities said that with the arrival of the peak season for photovoltaic installation in the second half of the year, continuous efforts in domestic policies and the possible high growth of demand in the U.S. market, the driving force of global photovoltaic demand side is expected to be strong and the installed capacity will maintain a high growth rate.

On the demand side, China's newly added photovoltaic installed capacity in January-April 2024 was 60.11 GW, a YoY increase of 24.43%. Domestic market demand for installed capacity continues to grow. Globally, considering the significant cost advantage of photovoltaic power generation, Huatai Securities predicts that global photovoltaic installed capacity will still maintain a high growth rate, with more than 530 GW installed in 2024, a YoY increase of more than 20%. Specifically, the European and American markets are expected to see relatively bright growth: according to the U.S. Energy Information Administration (EIA), the United States is expected to add 44.7 GW of new photovoltaic installed capacity in 2024, a YoY increase of more than 30%. Huatai Securities said that with the arrival of the peak season for photovoltaic installation in the second half of the year, continuous efforts in domestic policies and the possible high growth of demand in the U.S. market, the driving force of global photovoltaic demand side is expected to be strong and the installed capacity will maintain a high growth rate.

On the supply side, continuous release of production capacity has led to intensified industry competition. According to Pvinfolink data, the silicon price slid over 70% in 2023, and the price continued to decline since 2024. From the beginning of 2024 to June 5, it decreased by 38.46% to 40 yuan/kg. The decline in silicon prices led to a continuous decline in prices of multi-link products including silicon wafers, cells, and modules. Huatai Securities said that many companies at this exhibition called for an end to “inward integration” and pursued overall victory rather than partial optimality. In addition, the industry clearance trend is gradually emerging as each segment has poor profit margins. In the supply-demand mismatch cycle, new technologies that reduce costs and increase efficiency are expected to accelerate the clearance of industrial production capacity.

On the supply side, continuous release of production capacity has led to intensified competition in the industry. According to Pvinfolink data, the silicon price slid over 70% in 2023, and the price continued to decline since 2024. From the beginning of 2024 to June 5, it decreased by 38.46% to 40 yuan/kg. The decline in silicon prices led to a continuous decline in prices of multi-link products including silicon wafers, cells, and modules. Huatai Securities said that many companies at this exhibition called for an end to “inward integration” and pursued overall victory rather than partial optimality. In addition, the industry clearance trend is gradually emerging as each segment has poor profit margins. In the supply-demand mismatch cycle, new technologies that reduce costs and increase efficiency are expected to accelerate the clearance of industrial production capacity.

Under the background of industry “internal integration,” new technologies that reduce costs and increase efficiency emerge frequently. By improving conversion efficiency to increase the output power of components and then obtaining a higher premium per watt, and by reducing the cost of materials such as silicon wafers and silver paste to obtain a more resilient cost structure, is the main reason for the frequent emergence of new technologies in the photovoltaic industry under the background of “internal integration.” For the main link technology, we are bullish on granular silicon that has cost advantages, as well as N-type cells and perovskite with significant cost reduction and efficiency improvement space. In equipment technology, we recommend paying attention to 0BB string welding machines, HJT large-capacity equipment and copper interconnection technology, stack gate technology, TOPCon half piece passivation technology, laser efficiency improvement technology, tungsten wire cold drawing technology.

Under the background of industry “internal integration,” new technologies that reduce costs and increase efficiency emerge frequently. By improving conversion efficiency to increase the output power of components and then obtaining a higher premium per watt, and by reducing the cost of materials such as silicon wafers and silver paste to obtain a more resilient cost structure, is the main reason for the frequent emergence of new technologies in the photovoltaic industry under the background of “internal integration.” For the main link technology, we are bullish on granular silicon that has cost advantages, as well as N-type cells and perovskite with significant cost reduction and efficiency improvement space. In equipment technology, we recommend paying attention to 0BB string welding machines, HJT large-capacity equipment and copper interconnection technology, stack gate technology, TOPCon half piece passivation technology, laser efficiency improvement technology, tungsten wire cold drawing technology.

Although downstream companies should theoretically reduce capital expenditures under the background of poor industry profitability, new technologies, which can bring higher conversion efficiency and output power and lead to higher product premiums, are expected to bring higher profit margins to companies as well. New technologies are expected to help companies stand out under the background of “internal integration” and pass through the cycle when considering the industry's optimistic demand in the medium and long term and pressure on the supply side. We recommend focusing on GCL Tech (03800), Wuxi Autowell Technology Co., Ltd. (688516.SH), Suzhou Maxwell Technologies (300751.SZ) and other companies related to new technologies.

Although downstream companies should theoretically reduce capital expenditures under the background of poor industry profitability, new technologies, which can bring higher conversion efficiency and output power and lead to higher product premiums, are expected to bring higher profit margins to companies as well. New technologies are expected to help companies stand out under the background of “internal integration” and pass through the cycle when considering the industry's optimistic demand in the medium and long term and pressure on the supply side. We recommend focusing on GCL Tech (03800), Wuxi Autowell Technology Co., Ltd. (688516.SH), Suzhou Maxwell Technologies (300751.SZ) and other companies related to new technologies.

Risks include intensified industry competition, lower-than-expected overseas photovoltaic demand, and slower-than-expected new technology iteration.