What do you think? China polysilicon firms plan $7 billion fund to shut a third of industry capacity

Chinese producers of polysilicon, a building block for solar panels, are in talks to create a 50 billion yuan ($7 billion) fund to acquire and shut down roughly a third of production capacity and restructure part of the loss-making sector, GCL Technology Holdings said.

The top polysilicon producer told Reuters plans were being discussed to acquire and shut at least 1 million metric tons of lower-quality polysilicon capacity.

The plan is one of the strongest signals yet that the heightened rhetoric against overcapacity rolled out by the Chinese government this month is translating into action. Chinese industries, from solar to electric vehicles, are grappling with massive overcapacity and vicious price wars that are wiping out profits.

The polysilicon acquisition vehicle would be launched late in the third quarter of this year and would start making purchases in the fourth quarter, both of excess capacity and of market inventories, Zhu said.

The proposed closures would leave approximately 2 million tons of capacity remaining in the market, he added. China's production capacity was 3.25 million tons at the end of 2024, according to Bernreuter, an industry research group.

China has a near-monopoly over solar-grade polysilicon, producing 95% of the world's total in 2024, according to Bernreuter. China's share of the rest of the solar supply chain, including cells, modules and wafers has also reached over 80% in recent years.