More than 90% of major Chinese solar PV manufacturers are reporting net losses, according to the latest report from the International Energy Agency (IEA).
In a chapter covering renewable manufacturing supply chains in its report Renewables 2026, IEA says higher solar module prices, which are now up 10-30% on 2025 levels, have not been enough to restore profitability in the Chinese solar manufacturing sector.
The cumulative net loss of major Chinese solar manufacturers and polysilicon producers increased from around $4.4 billion in 2024 to almost $5.5 billion last year, the report says, with over 70 companies filing for bankruptcy or liquidation since 2024.
It adds that while net margins have stayed negative through the first three quarters of 2026, there are signs that losses are stabilising.
“In recent quarters, the middle 50% of analysed companies reported net margins between -5% and -15%, a narrower range than the 0% to -30% recorded in 2024,” the report explains, while adding that improvements have been concentrated among companies diversifying into higher-margin business segments such as energy storage system integration.
Despite ongoing consolidation, IEA’s report predicts solar supply chains will remain highly concentrated in China through to 2031, particularly for polysilicon and wafer production.
The agency expects the consolidation phase to favour manufacturers with stronger balance sheets, higher-quality capacity and more competitive technology portfolios, in turn accelerating the exit or absorption of weaker producers. The report predicts the impact of consolidation will vary across the supply chain, with upstream segments having to adjust more as they currently account for the majority of excess manufacturing capacity in China.
Outside of China, selected solar manufacturers are managing to remain profitable despite ongoing global manufacturing overcapacity, the report says.
IEA explains that for these manufacturers, median net margins have remained broadly stable at 10-15% since 2023, with technological differentiation, localisation strategies and access to protected markets underpinning their profitability.
The report also highlights that solar manufacturing hubs outside of China are emerging, most notably in India. These hubs are focusing primarily on cells and modules, the report continues, as these segments require lower upfront upstream polysilicon and wafer production.
“Trade barriers and industrial policies are also increasingly influencing the location of new manufacturing capacity,” the report says. “However, in the current low-price environment, new manufacturers need clear competitive advantages in their target markets, such as technological differentiation, policy support, local-content advantages or strong domestic demand.”
Predictions from IEA forecast that, under a scenario in which the current pace of bankruptcies continues and no major new investments are made, global polysilicon manufacturing capacity could shrink by up to 45% by 2031. If market conditions improve and investment activity resumes, the reduction could be limited to around 15%.
Wafer manufacturing is also expected to undergo consolidation in the coming years, with capacity forecast to decline by an estimated 10-35% by 2031 depending on market conditions. Solar cell and module manufacturing capacity is projected to fall by 5-15%.
IEA’s report also notes an ongoing trend of solar manufacturing companies increasingly looking towards adjacent growth markets, most notably battery storage.
While it says this shift offers access to a faster-growing segment with potentially stronger margins, the report also warns it “risks transferring the solar industry’s overcapacity dynamics into the battery supply chain if expansion again overtakes demand.”
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