Effective April 1, the 9% VAT export tax rebate for photovoltaic products will be officially abolished, marking the end of the subsidy era that has lasted for many years.

On the eve of the policy taking effect, the industry has not seen the expected “rush to export.” Export data across the entire supply chain remained stable in January and February, while polysilicon prices fell to a new low of 40,000 yuan per ton. Prices for wafers and cells continued to decline, reflecting persistently low market sentiment and a lack of recovery in end-user demand.

Once the policy takes effect, the PV industry will shift from being “subsidy-driven” to competing on genuine market-based competitiveness. In the short term, multiple factors—including the policy cancellation, falling prices across the supply chain, and sluggish demand—may put pressure on PV companies’ performance in the second quarter. In the medium term, the acceleration of capacity rationalization is expected to improve the supply-demand balance. Standing at this historic juncture of industry restructuring, technological, cost, and channel advantages will determine which companies can weather the cycle, while market attention is focused on the expected profit recovery of leading enterprises.

Cancellation of Tax Rebates Accelerates Capacity Rationalization and Industry Consolidation

The cancellation of VAT export tax rebates essentially represents a policy move to proactively cut off the channel for “subsidy-driven low-price competition,” aiming to accelerate industry rationalization. In the past, state subsidies for exports allowed some low-quality, inefficient production capacity to survive. With the policy now rescinded, companies must compete based on actual costs, technology, and distribution channels, rather than relying on policy benefits.

Once the policy takes effect, the “subsidy-driven” survival space for PV manufacturers will be completely eliminated. For small and medium-sized enterprises (SMEs) whose gross profit margins have long hovered around 3% to 5%, the cancellation of tax rebates means costs will increase by several percentage points. Adapting to fully market-driven competition is the primary challenge these companies face. For leading enterprises with fully integrated production capabilities—spanning polysilicon, wafers, cells, and modules—the additional costs can still be absorbed within the supply chain or passed on to downstream players, thanks to their advantages in manufacturing costs, brand reputation, and capital.

PV manufacturers have already begun to react. According to public data, major module manufacturers have raised their export prices in an attempt to pass the cost pressures resulting from the cancellation of tax rebates on to end consumers.

It remains unclear how the scale of PV product exports will change once the subsidy cancellation policy officially takes effect. However, from the perspective of domestic demand, the recent sustained decline in prices across the industry chain reflects the current reality of weak demand.

The Silicon Industry Branch of the China Nonferrous Metals Industry Association (hereinafter referred to as the “Silicon Industry Branch”) disclosed this week that polysilicon prices fell to around 40,000 yuan per ton during the week, with wafer and cell prices declining in tandem. Among these, mainstream cell prices fell by 2.44% week-on-week, while module prices remained flat compared to the previous week.

The Silicon Branch pointed out that the primary reason for the continued downward trend in supply chain prices is that both upstream and downstream enterprises hold relatively pessimistic views on the future market. Downstream enterprises have extremely low purchasing intent and are exerting significant pressure to lower prices. The mindset of “buying when prices rise but not when they fall” is becoming increasingly evident among downstream players, further suppressing purchasing intent beyond essential needs and leading to even weaker market demand.

The price decline is exerting dual pressure on the industry. On one hand, the survival space for marginal enterprises is being squeezed; following the cancellation of tax rebates and subsidies, they can no longer absorb cost shifts through price hikes, posing a challenge to their operational resilience. On the other hand, weak demand is also forcing a slowdown in the pace of supply-side consolidation. According to industry surveys, utilization rates at wafer manufacturers have generally declined this week, with some companies planning to cut production and reduce capacity. Utilization rates have dropped from 50%–70% to low levels. Combined with high inventory levels and falling raw material prices, pressure for supply-side contraction has become evident.

Short-term Impact on Second-Quarter Earnings; Mid-Term Potential to Reshape the Industry Landscape

The end of the subsidy era is not the end of the photovoltaic industry’s development, but rather a turning point from policy-driven growth to market competition. The role of full-scale market-driven competition in promoting supply-side consolidation has drawn widespread market attention.

Since the current solar cycle entered its trough, the process of capacity consolidation has proven more complex than anticipated. In 2025, leading companies initially explored pathways to regulate supply through market-based measures, such as signing self-discipline agreements and jointly establishing capacity integration platforms. Although this achieved a certain degree of capacity consolidation, it was insufficient to fully reverse the supply-demand dynamics.

The implementation of the export tax rebate cancellation policy marks the official end of the model of relying on fiscal subsidies to compete internationally. Faced with an increasingly complex international trade environment, leading companies are accelerating their “global localization” strategies, establishing overseas production bases in key markets such as Southeast Asia and the Middle East to achieve the “integration” of production, operations, branding, and services in their global expansion. Therefore, the impact of the subsidy cancellation is only temporary.

In the short term, however, the combined impact of the immediate shock from the cancellation of export tax rebates, sluggish product prices, and strong wait-and-see sentiment among end-users suggests that second-quarter financial reports for PV companies are unlikely to be optimistic. The recent rapid decline in prices across the PV supply chain has not only failed to stimulate demand but has actually intensified wait-and-see sentiment, indicating that market consolidation requires two key conditions: a definite reduction in inventory and a substantial recovery in end-user demand. However, no clear signals have emerged so far.

The rebound in polysilicon prices in the second half of 2025 has already helped some companies return to profitability. In 2026, the industry will enter a critical phase of capacity rationalization. The “growing pains” following the subsidy phase-out will accelerate the elimination of outdated capacity, and its role in driving supply-side rationalization warrants close monitoring.

The short-term shock will accelerate the reshuffling of industry competition while also creating mid-term development opportunities. Against the backdrop of the global energy transition, the strategic value of photovoltaics has not diminished; rather, it has been further highlighted by dramatic shifts in the international energy landscape and the emergence of new application scenarios. The market’s focus is on which photovoltaic companies can better adapt to market-driven competition and the valuation recovery opportunities arising from expectations of a turnaround in operating performance.

With international oil prices recently surpassing the $100-per-barrel mark, coupled with ongoing tensions in the Middle East, the strategic importance of clean energy has been elevated once again. At the same time, positive signals are emerging from domestic policy—the Government Work Report has, for the first time, included “computing-power synergy,” underscoring the increasingly critical role of PV and energy storage in powering AI data centers. With the explosive growth in AI computing power demand, data center electricity consumption is rising exponentially, and green power solutions combining PV and energy storage are poised to seize a new round of development opportunities.

Following this industry shakeout, leading companies, backed by multiple competitive moats, are expected to be the first to reap the benefits of the optimized market landscape.

From a cost perspective, leading companies with comprehensive integrated operations and strong financial resources possess production capacity across all stages—from polysilicon and wafers to cells and modules—enabling them to mitigate the impact of price fluctuations through internal synergy. From a technological perspective, next-generation high-efficiency technologies such as BC cells and HJT are widening the generational gap. With mass-production conversion efficiencies 1.5 to 2 percentage points higher than traditional PERC cells, these technologies deliver significantly greater power generation under equivalent conditions, and this technological premium can effectively offset cost pressures. From a channel and brand perspective, companies that have established sales networks and brand recognition in the world’s top ten PV markets possess far greater bargaining power than participants who rely solely on contract manufacturing or a single market. They are also better positioned to expand into high-value-added segments such as system solutions, smart O&M, and energy storage integration.

As an integrated internet platform providing benchmark prices, on March 30, the benchmark price for silicon from SunSirs stood at 9,510.00 RMB/ton, a decrease of 0.31% compared to the beginning of the month (9,540.00 RMB/ton).

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