Firstly, the current trend in the photovoltaic industry still revolves around "anti involution". We expect that the supply-demand gap in the entire photovoltaic industry may gradually narrow by 2026, and prices in various links of the industry chain are expected to gradually rise. Starting from 2023, the prices of the photovoltaic industry chain have significantly declined, resulting in almost complete losses for the main industry chain. The auxiliary materials, equipment, and other links are also facing problems such as extended payment terms, increased bad debts, and downstream customer price pressures, leading to extremely tight cash flow for enterprises. Photovoltaic is an industry in which China has strong competitiveness globally, so the urgency of rectifying the industry's "internal competition" is extremely high.
From the demand side, from January to May 2025, due to the impact of the "Distributed Management Measures" and the "Document No. 136" policy, there will be a phased rush to install photovoltaic capacity; After the policy window closed, especially since June, the number of domestic grid connected projects sharply decreased, and the market entered a vacuum period. Looking ahead to 2026, we believe that domestic demand for photovoltaic installed capacity may show a relatively weak trend.
However, from the supply side, at the end of last year, multiple industry leaders jointly invested to establish a storage platform company. Although the storage platform has not yet mentioned specific issues and plans related to silicon material storage in its main business introduction, we believe that this to some extent means that the silicon material industry is working to solve the problem of price inversion. At the same time, the National Standards Committee has organized the completion of the draft for soliciting opinions on three national standards, including "Energy Consumption Limits for Silicon Polycrystalline and Germanium Unit Products", and publicly solicited opinions. The tightening of energy consumption standards is expected to promote the gradual withdrawal of existing production capacity. It is expected that with the continuous promotion of the "anti involution" process, the capacity expansion of silicon wafers, components and other links may gradually come to a halt in 2026, and some links may even experience production cuts. The production capacity of each link will no longer expand, and the surplus situation is expected to continue to ease.
Looking at the detailed stages:
-Firstly, in the silicon material sector, due to factors such as planned production cuts and maintenance by top enterprises, as well as reduced load on some equipment, the production of polycrystalline silicon reached a temporary high in October and then significantly declined from November onwards. The supply of polycrystalline silicon in 2025 has significantly decreased compared to the peak in 2023 and 2024, and the trend of active contraction on the supply side has become increasingly evident, laying the foundation for subsequent supply improvement. Therefore, from the supply side perspective, under the consensus of the industry, we believe that the willingness to stabilize the price of silicon materials is extremely firm; On the demand side, the short-term price of polycrystalline silicon is expected to remain stable, and both supply and demand sides can receive certain support. In 2026, we believe that if the silicon material industry continues to promote production cuts and shutdowns, the supply-demand gap is expected to further converge, and the price and profit center will have a foundation for stabilization and recovery.
-Next is the silicon wafer sector. After experiencing rapid expansion in the early stages, the silicon wafer industry has significantly slowed down its new production capacity from 2025, and the growth rate on the demand side is gradually weakening. The industry maintains supply and demand balance through production control and destocking. Looking ahead to 2026, driven by supply clearance and structural optimization, we believe that the weak price of silicon wafers is expected to improve, and the competitive landscape will gradually shift towards the top.
-In the battery sector, it is also expected that there will be no significant increase in supply side production capacity by 2026, but rather optimization work will be carried out in terms of efficiency, yield, and cost around TOPCon and other directions. As for BC batteries, we believe that their penetration rate is expected to steadily increase driven by cost reduction and demand for scenario based applications.
-Finally, in the component sector, since the industry entered a deep "involution", component prices have rapidly declined, leading to the entire component industry entering a low profit or even loss zone by 2025. However, driven by cost optimization and expense improvement, the decline in gross profit margin of top enterprises has significantly narrowed. It is expected that this year, with the supply side clearing and the marginal easing of price wars, the gross profit margin of the component industry is expected to be somewhat restored.
In addition, the second main line of the photovoltaic industry is the new technology direction that has recently attracted market attention - space photovoltaics. What is space photovoltaics? As the name suggests, space photovoltaics refers to a complete set of technological systems that can convert solar energy into electrical energy, applied in space environments such as satellite orbits, space stations, and deep space exploration. At present, photovoltaics are one of the most reliable, economical, and sustainable sources of electricity for solar system spacecraft, and "photovoltaic+energy storage" has become a standard configuration for aerospace power systems.
Why is photovoltaic technology mainly used for space power generation, rather than other power supply methods? We believe that the core advantages of space photovoltaics are very significant. Firstly, space is unobstructed by atmospheric and cloud cover, and is not affected by day, night, or seasonal changes. Solar energy can achieve almost infinite stable supply, and even if the spacecraft enters a shaded area, it can continue to be powered by energy storage to ensure stable mission advancement; Compared to the traditional fuel powered mode of high transportation costs and significant limitations on spacecraft endurance, photovoltaic systems do not require fuel supply and can support long-term operation of spacecraft; At the same time, photovoltaic cells are lightweight and can be designed in a flexible and foldable form to meet the installation and deployment needs of spacecraft. They can also achieve maximum sunlight absorption efficiency by optimizing the layout and angle of the solar panels; In addition, the photovoltaic system has a simple structure and low maintenance requirements, which can significantly reduce the maintenance and replacement operations of energy systems in spacecraft long-term missions, further reducing potential risks and operation costs of the mission.
From the perspective of downstream applications, on the one hand, the current global commercial space competition continues to heat up, and low orbit satellites are expected to drive demand for solar wings; On the other hand, the competition among giants in the field of artificial intelligence is fierce, and "computing power soaring" has become a consensus in the industry, which is expected to further drive the growth of demand for space photovoltaics.
Specifically, in the field of low Earth orbit satellites, due to the International Telecommunication Union (ITU) following the "first come, first served" rule for low Earth orbit resources, space resources have become a new battlefield for global power competition. With SpaceX's first mover advantage, the United States has temporarily occupied the leading position in the field of LEO communication satellites. The Federal Communications Commission (FCC) of the United States approved SpaceX's application this month, allowing it to deploy 7500 second generation satellite chains to further improve the global Internet service capability. In December 2025, China submitted frequency and orbit resource applications for a total of 203000 satellites to ITU, aiming to seize these valuable orbit resources. As an important energy supply for extraterrestrial spacecraft, we believe that space photovoltaics will also benefit from the global commercial space boom. Musk stated that SpaceX and Tesla are increasing their solar energy production capacity, with the goal of reaching an annual capacity of 100GW.
In addition, as the operating costs of ground computing power continue to rise, the advantages of space computing power are becoming increasingly apparent. That is to say, deploying large-scale and high-performance data centers in space orbit, utilizing solar energy resources and vacuum ultra-low temperature environment for efficient power supply and cooling, and supporting the operation of AI data centers. Overseas, Musk's SpaceX, Tesla, and xAI are collaborating to build orbital data centers; Google is also advancing plans such as "Sun Catcher", aiming to launch its TPU into orbit and build a floating AI data center in low Earth orbit. Domestically, Beijing plans to construct and operate data centers with a power output exceeding one gigawatt on the 700-800 kilometer twilight track. Both domestically and internationally are actively laying out space computing centers, which are expected to bring greater growth to the photovoltaic sector in the future.
From a technological perspective, the main choices for space photovoltaic cells currently include gallium arsenide cells, crystalline silicon cells, and perovskite cells.
-At present, the mainstream choice is still gallium arsenide batteries, which have strong radiation resistance, high conversion efficiency, long service life, and the most excellent comprehensive performance. However, limited by the production capacity of precious metals, their high raw material prices and limited mass production capacity make them more suitable for fields such as high orbit satellites and high-value communication satellites.
-Crystalline silicon batteries have recently received much attention, as they also have strong radiation resistance, can be produced in thin films, and have low production costs. Although its service life is not as long as gallium arsenide, it is still suitable for the low orbit satellite field. We believe that crystalline silicon batteries have the potential to achieve large-scale applications in the short term.
-As for perovskite cells, their theoretical performance is close to gallium arsenide, with high energy to quality ratio and strong radiation resistance. However, there is currently a lack of actual empirical data and the industry chain is not yet mature. Therefore, we believe that its short-term large-scale application still needs to be observed. Crystalline silicon perovskite stacked batteries may be the first to land, but in the long run, they are expected to become an important choice for low orbit satellites.
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