China’s giant solar industry is in turmoil

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Overcapacity has caused prices—and profits—to tumble

in a smoggy corner of China’s inland Shaanxi province, the country’s world-leading solar industry is on display. Robots scoot around carrying square slices of polysilicon, a substance usually made from quartz. The slices, each 180mm across and a hair’s breadth thick, are called wafers. They are bathed in chemicals, shot with lasers and etched with silver. All that turns them into solar cells, which convert sunlight into electricity.

China’s solar industry is dominant across every stage of the global supply chain, from the polysilicon to the finished product. Module production capacity in the country reached roughly 1,000 gigawatts last year, almost five times that of the rest of the world combined, according to Wood Mackenzie, a consultancy. What is more, it has tripled since 2021, outgrowing the rest of the world, despite efforts by America and others to boost domestic production.

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