Tongwei Co. acquisition: industry leader takes the lead to break the photovoltaic "involution," and mergers and acquisitions open a new cycle of industry consolidation

On March 11, the photovoltaic industry received a major signal of consolidation—Leading domestic photovoltaic company Tongwei Co., Ltd. officially disclosed plans to issue shares and pay cash to acquire assets and raise supporting funds. The plan proposes to acquire 100% equity of Qinghai Lihao Qingneng Co., Ltd. (hereinafter referred to as “Lihao Qingsheng”) through a combination of share issuance and cash payment, and to raise supporting funds from no more than 35 qualified investors.

Industry insiders revealed that this acquisition is a milestone market-based merger and acquisition case in the industry’s process of “countering internal competition.” “As a global leader in silicon materials and solar cells, Tongwei’s move to acquire Lihao Qingsheng, a high-quality silicon material asset, is likely to trigger a chain reaction in the industry, accelerating capacity clearing and reshaping the industry landscape,” the insider said.

Reviewing the plan and publicly available industry information shows that behind this acquisition are the long-term “internal competition” dilemmas in the industry, the evolution of consolidation pathways, and multiple policy and regulatory resonances. Several industry experts stated that Tongwei’s acquisition of Lihao Qingsheng is not only a strategic move to strengthen core competitiveness but also a positive response to the industry’s “countering internal competition” trend, potentially setting a benchmark for market-based consolidation in the photovoltaic sector.

Policy and Regulatory Support from Multiple Dimensions, Establishing a Benchmark for Market-Based Consolidation

It has been found that Tongwei’s acquisition of Lihao Qingsheng is not merely a corporate action but aligns closely with current capital market regulatory trends and industrial policy directions, receiving policy support from multiple departments, making it a benchmark case for market-based consolidation in the industry. The resonance of policies and regulations will create a favorable environment for market-based mergers and acquisitions, promoting the industry’s accelerated “countering internal competition” process.

In recent years, the China Securities Regulatory Commission (CSRC) has continuously optimized regulations on mergers and acquisitions of listed companies, encouraging companies to focus on their main businesses during M&A activities, improving quality and core competitiveness. The CSRC also supports listed companies in achieving high-quality development through market-based M&A, simplifying approval processes, and increasing efficiency. It is understood that Tongwei’s core businesses are high-purity crystalline silicon and solar cells, while Lihao Qingsheng specializes in R&D, production, and sales of high-purity crystalline silicon. This horizontal acquisition around core businesses can realize operational synergy, increase capacity and market share in silicon materials, and strengthen core competitiveness, aligning well with the CSRC’s guidance to improve quality and focus on main businesses through M&A.

Since the implementation of the “Nine Articles” in 2004, there has been no large-scale M&A case in the photovoltaic industry. Tongwei’s acquisition of Lihao Qingsheng will become an important benchmark for industry consolidation leveraging capital markets.

In addition to regulatory support from the capital market, Tongwei’s acquisition also resonates strongly with national industrial policies from the National Development and Reform Commission (NDRC), Ministry of Industry and Information Technology (MIIT), and other departments. It is an active response to optimize supply structure and curb disorderly low-price competition through market mechanisms, receiving strong support from relevant authorities. Industry insiders pointed out that this acquisition exemplifies the industry’s transition from “rough growth” to “mature consolidation,” reflecting the strategic resilience of leading companies through cycles and the industry’s shift from “internal competition” to market-oriented operations. It will serve as a model for other companies, encouraging more leading enterprises to participate in market-based M&A, accelerating capacity clearing and high-quality development.

Furthermore, according to third-party insiders, currently, domestic photovoltaic companies seeking to list in Hong Kong or A-shares must undergo pre-approval by relevant government departments. The approval focuses on capacity scale, technological level, environmental standards, and industry competitiveness, aiming to regulate development, prevent low-level repetitive construction, and promote “countering internal competition.” Under this context, industry professionals speculate that Tongwei’s acquisition may be a government-coordinated effort to establish a “countering internal competition” banner in the industry. By guiding leading companies to carry out market-oriented M&A, the government aims to quickly promote capacity clearing and reshape the industry landscape, achieving the goal of “countering internal competition.” This acquisition could serve as a demonstration for other companies, fostering a healthy ecosystem of “supporting the strong and consolidating the weak.”

Market-Based M&A Could Trigger a “Butterfly Effect” for Efficient Industry Clearing and Reshaping

As a leading enterprise in the photovoltaic industry, Tongwei’s proactive acquisition of Lihao Qingsheng is expected to trigger a “butterfly effect,” encouraging other top companies to accelerate market-based M&A, enabling capacity clearing and landscape reshaping with minimal social cost and in the shortest time. Market-based M&A is poised to become the main mode of industry consolidation, with increasing industry concentration and a more optimized competitive landscape.

It is understood that Tongwei, as a global leader in high-purity crystalline silicon and solar cells, has maintained the top global market share in these segments for years, with module shipments ranking among the top five worldwide. Its products are cost-competitive, high-quality, and efficient, backed by strong financial, technological, and channel advantages. This move to acquire Lihao Qingsheng will set a benchmark for other leading companies, encouraging more to participate in market-based M&A. Industry insiders report that several other top photovoltaic companies are already exploring high-quality assets in silicon materials, cells, and other core segments, with some initiating M&A research.

Additionally, this acquisition will promote upstream and downstream integration of the photovoltaic industry chain. Silicon materials, as a core upstream segment, directly influence the competitive landscape of downstream cells and modules. As silicon material concentration increases, downstream bargaining power will shift, and some small- and medium-sized cell and module companies may be acquired by leading firms, further consolidating the entire industry chain.

Compared to platform-based industry integration led by associations, market-oriented M&A led by industry leaders is more efficient, achieving resource optimization, reducing market competition, and increasing industry concentration with less social cost and faster results.

“Long-term, market-based M&A is the optimal path for industry consolidation, enabling the best allocation of resources and shifting the industry from scale competition to high-quality development driven by efficiency and technology,” said an industry expert. “After acquiring Lihao Qingsheng, Tongwei can quickly integrate its green, traceable high-purity crystalline silicon technology, enriching its product portfolio, enhancing differentiation, and reducing costs through scale effects, thus promoting technological upgrades and cost optimization in the silicon material segment.”

It is noteworthy that Tongwei’s plan to acquire 100% of Lihao Qingsheng is not just a simple asset purchase but a landmark event indicating a strategic shift in industry consolidation under policy and regulatory guidance. It marks an important milestone in the industry’s “countering internal competition” process. The author believes that future competition in the photovoltaic industry will no longer focus solely on scale but on technology, efficiency, and quality. Market-based M&A will become the mainstream approach for industry integration, with increasing industry concentration. Tongwei’s proactive move will not only strengthen its core competitiveness and solidify its leading position but also set a benchmark for market-based consolidation, accelerating the industry’s transition from “price competition” to “technological upgrade and quality improvement,” helping China’s photovoltaic industry evolve from a “big photovoltaic country” to a “powerful photovoltaic nation.”