The photovoltaic industry has made great progress in recent years, but it is also facing many challenges, although the photovoltaic industry has made remarkable achievements in terms of installed capacity and power generation, but it still cannot solve the problem of oversupply behind it.
Wafer production reached 63GW in February and 69.75GW in March, resulting in a continuous increase in inventory, exacerbating the oversupply situation and putting pressure on the profitability of wafer companies.
Today, let's take a look at the development of the photovoltaic silicon wafer industry and the difficulties it faces.
The development of N-type, thin-line, and large-size photovoltaic silicon wafers
Photovoltaic silicon wafers are the core raw materials for the production of photovoltaic cells, including monocrystalline silicon wafers and polycrystalline silicon wafers according to the purity grade, of which the demand for monocrystalline silicon wafers is very high, with a market share of 95%.
Monocrystalline wafers can be divided into P-type wafers and N-type wafers, due to lower production costs and mature manufacturing processes, P-type wafers have long dominated the market, but in contrast, N-type wafers have higher conversion efficiency and better cost performance, and their market share is increasing, with a market share of more than 50% by the end of 2023.
The wafer production process includes steps such as wafer pulling, truncation, sizing, grinding, slicing, cleaning, and sorting. The Cyzopull method is the mainstream process for the preparation of monocrystalline silicon wafers, and the thinning of diamond wire is the key technology to reduce silicon loss and increase wafer output.
At present, the widely used carbon steel diamond wire diameter has been reduced to 35um, approaching the limit, and tungsten wire as a new material has a larger space for thinning, therefore, tungsten wire is expected to replace high-carbon steel wire to become the mainstream busbar, and the market size is expected to reach 15 billion in 2025.
In recent years, in order to improve the power output per unit area of photovoltaic silicon wafers, large-size silicon wafers have developed rapidly, and the common specifications are M2, M6, M10, G12 and so on. G12 (210mm) and M10 (182mm) accounted for 82.8% of the combined market in 2022 and have become mainstream products in the market.
On the whole, with the continuous progress of photovoltaic technology, the photovoltaic silicon wafer industry tends to develop N-type, fine-lined/thin-sheet, and large-size development.
Wafer production capacity has exploded, and there are hidden concerns about price decline
In 2023, the output of silicon wafers in mainland China will exceed 622GW, a year-on-year increase of 67.5%, which can be described as a fierce momentum.
In stark contrast to the rapid growth of PV wafer production, PV wafer prices have continued to fall.
Polysilicon is the most important cost structure of photovoltaic wafers, accounting for more than 80%, and the price change of polysilicon has a decisive impact on the cost of silicon wafers.
Since the dual carbon goal was proposed, major players such as Skyworth, Gree, Konka, and TCL have entered the photovoltaic track, and the production capacity of the entire photovoltaic industry chain has soared, and the market has obviously oversupplied.
In terms of production equipment, the large size and fine wire of silicon wafers have increased the demand for diamond wire, and every 10% decrease in diamond wire diameter, the cutting speed will decrease and the amount of wire will increase by 10%, so the demand growth rate of diamond wire is higher than that of the photovoltaic industry, with an annual growth rate of more than 40%.
It is estimated that in 2025, the market size of the diamond wire industry in the photovoltaic field is expected to reach 15.6 billion yuan, and the demand may reach 371 million kilometers.
What is the PV wafer industry chain and what are the investment opportunities?
The structure of the photovoltaic silicon wafer industry chain is relatively clear, the upstream is all kinds of silicon wafer raw materials and manufacturing equipment, the midstream is the photovoltaic silicon wafer manufacturer, and the downstream is mainly the application of silicon wafers in photovoltaic cells.
The upstream is mainly a variety of raw materials and silicon wafer equipment, silicon wafer raw materials include silicon ore, industrial silicon, monocrystalline silicon and polysilicon. Silicon wafer equipment includes quartz crucibles, single crystal furnaces, diamond wires, grinding machines, etc.
Among the A-shares, Hesheng Silicon and Xin'an are industrial silicon suppliers, LONGi Green Energy, Zhonghuan and JinkoSolar mainly produce monocrystalline silicon, and GCL-Poly, Tongwei, Daqo Energy and Xinte Energy mainly produce polysilicon.
In terms of silicon wafer equipment, Quartz Co., Ltd. and Zhongqi New Materials are the representative enterprises of quartz crucibles, Meichang Co., Ltd., Gaoce Co., Ltd., Dale New Materials, and Zhongchang Precision provide diamond wire, and Jingsheng Electromechanical, Liancheng CNC, Otway, and Jingyuntong produce single crystal furnaces.
Today we focus on Meichang shares.
Meichang Co., Ltd. is the largest diamond wire manufacturer in mainland China, with a market share of more than 50%, and social security, foreign capital and other institutions are involved in it. Among them, foreign investors have a heavy position of 3.83 million shares through the Hong Kong Securities Clearing Corporation, 3.79 million shares of the 418 portfolio of the Social Security Fund, and a heavy position of the public fund Zhonggeng Fund.
The gross profit margin of diamond wire products is still at a high level in the entire photovoltaic industry chain, and the company's sales gross profit margin in the first three quarters of 2023 is as high as 57.96%, far exceeding the industry average.
With the stabilization of photovoltaics and the rapid growth of diamond wire demand, the company's performance growth will be promoted, and the agency expects that the company's net profit will reach 2.5 billion by 25 years, compared with 760 million in 21 years, a direct triple.
In the first three quarters of 2023, the total sales volume of diamond wire was 92.2267 million kilometers, an increase of 42.65% over the same period, of which the sales volume of tungsten diamond wire was 8.4007 million kilometers, and the product sales volume was in a leading position in the industry.
Moreover, the company's production equipment has also been upgraded, from 6 lines to 15 lines, and the production capacity of a single machine has increased by more than 150%. The 32 wires of carbon steel wire and the 28 wires of finer tungsten wire have also been applied in batches, in contrast, the progress of the high test is a little slower, especially the tungsten diamond wire, the high test is still in the technical reserve period.
The company also relies on its advantages in production capacity and product performance, and maintains close cooperative relations with strong customers in the downstream industry, including mainstream silicon wafer companies such as LONGi Green Energy, Hongyuan New Materials, Jinko Solar, and JA Solar.
Midstream is the manufacturing of photovoltaic silicon wafers, including photovoltaic polycrystalline silicon wafers, photovoltaic monocrystalline silicon wafers and photovoltaic amorphous silicon wafers.
Among the A-shares, LONGi Green Energy ranks first in the world in monocrystalline silicon shipments, Zhonghuan focuses on the R&D and production of monocrystalline silicon, and JinkoSolar and JA Solar are also leaders in the silicon wafer industry.
The downstream is the application of silicon wafers in photovoltaic cells, which are mainly made into crystalline silicon photovoltaic cells, thin-film photovoltaic cells and perovskite cells.
In summary, the industrial chain of photovoltaic silicon wafers covers multiple links from upstream raw material and equipment suppliers to midstream producers and downstream application fields.
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