In a significant shift in the global solar industry landscape, First Solar Inc., a US-based company, has claimed the title of the world’s most valuable solar manufacturer for the first time since 2018. The Arizona-headquartered firm’s market capitalization surged to $21.15 billion, surpassing that of Chinese competitor Sungrow Power Supply Co., which faced a decline in share value, landing its market cap at approximately $20.85 billion.
This development marks a departure from the dominance of Chinese companies in the solar equipment manufacturing sector, a position they have held for years. China has been a powerhouse in global panel production, controlling over 80% of the supply chain. However, this ascent has not been without its challenges, as evidenced by the profit-diminishing effects of a price war and mounting trade barriers imposed by the United States.
The oversaturation of factories in China has led to a surplus in capacity, driving down prices and squeezing profit margins for Chinese manufacturers. Longi Green Energy Technology Co., a prominent player in the Chinese solar industry, reported a significant net loss of 2.35 billion yuan ($325 million) in the first quarter of the year, starkly contrasting with its profit of 3.64 billion yuan during the same period in 2023.
Moreover, Chinese solar giants find themselves increasingly entangled in geopolitical tensions, with leaders from the US and Germany criticizing China’s overcapacity for hindering the development of solar supply chains elsewhere. In response, President Joe Biden announced a series of measures aimed at bolstering US manufacturers, including higher tariffs on Chinese solar panels.
First Solar stands out as a beneficiary of these actions, being the largest panel manufacturer in the United States. Its domestic sales are shielded by tariffs on Chinese products, which command nearly triple the prices of the global average. Additionally, the company’s expansion plans receive support from the Biden administration’s Inflation Reduction Act.
However, while market capitalization reflects investor sentiment, other metrics, such as production capacity and contribution to clean energy efforts, paint a more nuanced picture. Despite its newfound market value, First Solar lags behind its Chinese counterparts in terms of production volume, producing 12 gigawatts of panels in 2023 compared to Shanghai-based Jinko Solar Co.’s 79 gigawatts.
As the solar industry continues to evolve amidst geopolitical dynamics and shifting market forces, the emergence of First Solar as a frontrunner underscores the ongoing competition and the complexities inherent in the global renewable energy sector.
