Solar PV supply chain: 2026 marks the industry trough and the beginning of restructuring

In 2025, the PV industry continued to develop under the appearance of robust growth, while underlying risks accumulated during 2024–2025 gradually came to the fore. Across the supply chain, market participants began pursuing anti-price-war strategies through coordinated corporate communication, seeking to steer the industry back toward a healthier competitive trajectory.

Entering 2026, the market encountered an even more challenging inflection point. A sharp surge in silver prices have pushed up cell and module costs and—combined with corporate self-regulation measures—injected upward momentum into supply-chain prices.

Against this backdrop, the central theme for 2026 is no longer expansion, but control. The year’s key test lies in effectively easing inventory pressure while safeguarding cash flow and profit floors. Meanwhile, deglobalization continues to gain momentum, with the primary focus on restructuring supply-chain footprints and bargaining power amid an ongoing wave of localization in non-China markets.
 

Demand-side outlook for 2026: slowing growth and regional divergence may bring a short-term trough

Looking back at 2025, global demand showed pronounced divergence across regions. In China, growth moderated as the 14th Five-Year Plan period drew to a close and most provinces completed their installed-capacity targets. In addition, the rollout of the “Distributed PV Power Generation Development and Construction Management Measures” and Document No. 136 led to a more cautious pace of new installations in the second half of 2026.

In Europe, demand remained broadly flat amid multiple headwinds. India emerged as one of the few bright spots, supported by localization efforts and resilient domestic demand. In contrast, demand in the U.S. fell short of earlier expectations, while Brazil experienced a downturn due to policy-related factors. Overall, global module demand in 2025 is estimated at approximately 653–706 GWdc.

Looking ahead, 2026 is projected to mark the first year of negative growth in global PV demand in over a decade, with module demand forecast to decline to 529–624 GWdc. The key drivers lie in a pullback across traditional core markets—most notably China and the U.S.—while Europe, although maintaining steady development, is unlikely to deliver significant incremental growth this year. Additionally, an increasing number of countries are tightening renewable energy policies, making 2026 appear more akin to a short-term trough.

That said, PV remains one of the most cost-competitive power-generation options among renewables. As module power ratings continue to rise, solar-plus-storage parity accelerates, and longer-term demand drivers—including expansion into emerging markets, the replacement of aging projects, and energy buildouts for AI data centers—continue to advance, demand is expected to retain solid medium- to long-term resilience. This, in turn, is likely to usher the market into a phase of plateaued but steady growth.


 

Supply-side review of 2025: elevated capacity persists as inventory pressure extends into 2026

Supply chain: slower capacity growth, persistent effective overcapacity, and shift toward demand-driven production

In 2025, polysilicon price volatility intensified under the combined influences of market sentiment and futures-market dynamics. Full-year output is estimated at approximately 726 GW (converted), with average utilization rates around 44%, while peak monthly utilization reached only about 56%. This underscores the persistence of significant effective overcapacity, and production adjustments remained sluggish, partly due to the dampening effect of low electricity costs during the hydropower-rich season.

Following the downstream transmission of anti-price-war effects, wafer manufacturers in the midstream shifted their production strategies toward tighter pace control. Full-year utilization rates were around 54%, with output estimated at approximately 656GW.

The cell segment, meanwhile, remained caught between upstream and downstream pressures. Rising costs had a particularly pronounced impact on cell producers, as persistent supply–demand imbalances in the second half of 2025, compounded by cost pressure from higher silver prices, became evident in Q4 and are expected to continue weighing on the segment into the first half of 2026.

In the module segment, production was likewise anchored to a demand-driven approach. Full-year utilization rates were around 47%, even dipping to below 40% during the off-season. Going forward, cost-reduction efforts and market-share differentiation are expected to become more pronounced amid limited room for price increases and profitability under pressure.
 

Supply chain outlook for 2026: inventory is the key variable; market dynamics hinge on the strength of self-regulation

According to InfoLink, as of early 2026, polysilicon inventories have reached as much as 570,000–600,000 MT, equivalent to 300–316 GW, based on a polysilicon consumption rate of 1,900 MT/GW. With such elevated inventory levels, a sharp price collapse may occur if manufacturers fail to manage their output well.

Given ample inventories and deep production cuts in the wafer segment, large-scale polysilicon transactions are unlikely in Q1. Amid insufficient fundamental market support, prices began to trend lower toward the end of January. By month-end, spot prices for recycled mono-grade polysilicon fell below RMB 50/kg, while granular polysilicon prices remained range-bound at RMB 48–50/kg. Over the medium to long term, polysilicon prices are expected to see gradual downward adjustments and remain volatile at low levels. Price trends will continue to hinge heavily on the pace of inventory drawdowns and the effectiveness of production control measures.

Short-term movements in the midstream segments are primarily determined by the combined effects of downstream production schedules and costs; developments in January and February have been notably shaped by changes in both factors. Previous upward shifts in the price midpoint have prompted a more cautious stance among downstream players. Meanwhile, a sharp surge in silver prices has significantly compressed margins for cell manufacturers, leading to production cuts and, in some cases, temporary shutdowns. Accordingly, wafer inventories have started to build in the short term. Rising inventory levels are expected to weigh on subsequent negotiations and constrain further price upside. As a result, the midstream segment has increasingly shifted toward an order-driven production strategy.

As the terminal segment of the supply chain, largely dominated by vertically integrated manufacturers, the module segment has undergone notable strategic shifts in recent years. After two to three consecutive years of margin erosion, leading manufacturers have gradually transitioned from a strategy of loss-driven scale expansion toward a key focus on profit preservation. Orders priced below full cost are now treated with greater caution, and production schedules are managed in a more self-regulated manner. This strategic shift has provided short-term resilience to module prices. However, it also suggests that if demand fails to recover, the module segment will once again be tested by inventory drawdown pressures and mounting cash flow pressure.

Module price movements are expected to remain constrained in 2026. Early-year price increases are largely driven by the sharp rise in silver prices and stronger cost pass-through and price support under industry self-regulation.

The January 9 announcement by China’s Ministry of Finance (MoF) and State Taxation Administration (STA) to remove the 9% export VAT rebate for PV products—along with a transition period through April 1—has temporarily pulled forward non-Chinese orders and shipments. This has elevated export production priority, tightened Chinese supply, and provided near-term support to prices within China.

Overall, module prices this year will be shaped by multiple variables, including upstream consolidation efforts, compliance with production quotas, raw material price fluctuations, and policy shifts. These factors may influence price trends through changes in demand expectations and adjustments in industry operating cadence.

In non-China markets, upstream volatility has yet to show clear developments. However, amid the trend of deglobalization, attention in the ingot segment is shifting to existing Southeast Asian capacity and potential incremental additions in India toward the end of 2026.

On the cell side, Southeast Asian supply has been redirected to India in response to U.S. AD/CVD measures and tariffs. With multiple preliminary rulings scheduled to be issued and India’s ALCM implementation in 1Q-2Q26, these export-driven advantages are expected to gradually diminish. Meanwhile, with Middle East and Africa capacity ramping up in the first half of the year and India’s domestic cell capacity scaling in the second half, the U.S. and Indian markets may experience periods of temporary supply tightness.

For non-Chinese modules, under stricter self-regulation within China, monthly output has been reduced to 35–40 GW, with overall production planning becoming more conservative. Meanwhile, the nameplate capacity of Indian modules reached 122 GW in India by the end of 2025, with U.S. domestic module capacity standing at 73 GW. Accordingly, the contribution of manufacturing in non-China markets to global output is projected to increase significantly in 2026.
 

2026 priorities center on core capabilities—quality control and cost management

In 2026, the industry is expected to shift from a “race for volume” to “quality-driven survival.” A sustained recovery of supply-chain health will depend on the effectiveness of production discipline, the speed of inventory clearance, and the rollout of localized supply chains in non-China markets. A company’s ability to defend margins and cash flow amid high cost volatility and policy uncertainty will outweigh the significance of shipment rankings.