Falling Product Prices Weigh on Tongwei's Shipment and Margin

Tongwei positions itself as the global leader in polysilicon production, accounting for about 27% of domestic supply in 2023. Following a supply shortage in 2021 and 2022, polysilicon prices soared, leading to significant investments and subsequent oversupply. Consequently, prices fell sharply, resulting in a net loss for Tongwei's polysilicon business in the first half of 2024. Despite this overcapacity, Tongwei continues with its expansion efforts to protect its market share. As a result, we think polysilicon prices will remain subdued for a prolonged period until the small players are driven out of the market.