As one of the leading manufacturers of solar silicon wafers, TCL Zhonghuan faced a sharp decline in upstream polysilicon prices in the fourth quarter of last year, with an inventory impairment of RMB 1.464 billion for the entire year.
At the performance briefing held on March 30, the company’s management told investors that impairment projects mainly occurred in solar materials, including polysilicon, silicon rods and wafers. From November to the end of December last year, the prices of silicon materials and silicon wafers fell rapidly in the market. In accordance with accounting standards, the financial department has accrued inventory impairment at current market transaction prices.
According to the annual report, the company achieved an operating income of RMB 67.1 billion last year, a year-on-year increase of 63.02%; The net profit attributable to the parent company was RMB 6.82 billion, up 69.21%. The financial report disclosed that as of the end of 2022, the total impairment provision for assets was RMB 1.749 billion, mainly due to inventory impairment losses, which affected the total profit of RMB 1.464 billion.
However, with the continuous pick up of silicon material prices this week, the industry is expected to stabilize the price of the industrial chain.
The management of the company stated in the performance communication that the silicon material has been rising for two consecutive years, eroding 50%-60% of the profits of the industrial chain, suppressing terminal demand, and masking the company’s non silicon cost advantage.
In the fourth quarter of 2022, the price of the industry chain entered a downward channel, and in 2023, the core competitiveness of the industry returned from silicon hoarding to technological innovation and advanced manufacturing methods. The company’s competitive advantage relying on Industry 4.0 was even more significant.
Regarding the future outlook of the solar industry, the company’s head said that the excess profits from silicon materials will return to the terminal, highlighting the solar economy. The suppressed demand from 2020-2021 will explode in the future, while large ground power stations will constitute a major increment.
In the expectation of a better market, the rapid expansion of production capacity is the unanimous choice of many solar manufacturers, and they are afraid of falling behind. In terms of TCL Zhonghuan, the company’s crystalline production capacity at the end of 2022 was 140 GW, ranking first in the industry in terms of market share of silicon wafer export market, which will reach 180 GW by the end of 2023. In terms of supporting capacity, at the end of 2023, a planned capacity of 7 GW of cells and 30 GW of modules was planned, significantly increased compared to the scale in 2022.
Since this year, the industry has been particularly intensive about the expansion and implementation of N-type capacity such as TOPCon. According to the person in charge, the company has made serious consideration for the N-type in this year’s annual planning. Currently, the market share of N-type silicon wafers of the company is over 65%. In March, the shipment volume of N-type silicon wafers was close to 2 GW, which can meet downstream demand in terms of supply.
According to Shen Haoping, Vice-president and general manager of TCL Zhonghuan, due to the explosion of TOPcon and the rapid growth of heterojunction, different manufacturers have different preferences. There are nearly 300 categories of N-type silicon wafers, and various phenomena such as differentiated technology paths, management methods and technology cognition can be seen.
Shen Haoping believes that this is a very healthy state in industrial development. However, for substrate suppliers, that is, silicon wafer suppliers, there are significant challenges in terms of physical parameter satisfaction, engineering flexibility management, and product consistency control.
