China's solar factories slow output as overcapacity weighs on profits

China’s solar factories are tapping the brakes as the industry struggles with a price war and overcapacity that could force many into bankruptcy.

Some wafer factories are already operating at as little as 40% of their capacity with more production cutbacks expected in February, the China Silicon Industry Association said in a Thursday statement. Prices for the thin squares that get wired into cells and then assembled into panels have fallen 75% since August 2022, according to BloombergNEF.

Plunging costs followed a massive ramp-up in manufacturing capacity in China, as companies took advantage of cheap credit to build new factories to gain a technological edge over competitors with older equipment. At the end of 2022, China had 861 gigawatts of planned or operating wafer capacity, up from 380 in 2020.