Soochow Securities' 2026 Solar Strategy: Emerging Overseas Markets May Exceed Installation Growth Expectations; Domestic Anti-Internal Competition Measures Gradually Take Effect

Soochow Securities released a research report indicating that China's solar installations from January to October 2025 reached 252.87 GW, up 39% year-on-year, driven by Policy Document No. 136. Full-year installations are projected at 290 GW, while 2026 installations may decline 26% to 215 GW. Overseas, the U.S. and Europe are expected to add 50 GW and 70 GW, respectively, in 2025, maintaining stable growth of 15-21% thereafter. Emerging markets, particularly the Middle East and India, could surpass expectations, with installations forecast at 28 GW (+87% YoY) and 31 GW (+29% YoY) in 2025. Global solar installations are estimated at 599 GW (+11% YoY) in 2025 but may dip 2% to 588 GW in 2026 due to China's slowdown.

**Supply: Anti-Internal Competition Measures Take Effect, Prices Gradually Recover** 1) **Capacity Expansion Halts, Oversupply Eases**: From 2026, wafer and module capacity expansions will cease, with potential production cuts improving supply-demand balance. 2) **Profit Pressure and Gradual Recovery**: Losses persist in modules, cells, and wafers, with inventory reduction and tight cash flow remaining critical. Post-seasonal lows, production rates may moderately rebound. 3) **Industry Collaboration**: Leading polysilicon firms established Beijing Guanghe Qiancheng Technology Co., Ltd., a joint storage platform, marking a key step in addressing overcapacity and price distortions.

**Supply Chain: Accelerated Capacity Clearance, Price Recovery** - **Polysilicon**: Capacity hit ~3 million tons (1,500 GW equivalent) by end-2025, with utilization at 37%. Prices rebounded to ~¥50/kg, signaling margin recovery in 2026. - **Wafers**: Capacity plateaued in 2025 (50%+ utilization), with new projects stalled. - **Modules**: Prices dropped >60% from 2023 peaks, but leading firms’ margin declines narrowed, pointing to 2026 recovery. - **Glass/Auxiliary Materials**: Daily capacity fell to 8–9k tons; leaders maintain dominance. - **Inverters**: Strong growth in utility/commercial storage, steady residential demand.

**Technology**: TOPCon 3.0 (670W target) and BC (50GW+ capacity) advance, while perovskite pilot lines mature, with GW-scale production expected in 2025/26.

**Top Picks**: 1) **High-Growth Segments**: Inverters & mounting systems (e.g., Sungrow, GoodWe, Ginlong). 2) **Supply Reform Beneficiaries**: Polysilicon leaders (e.g., Tongwei, GCL Tech) and module giants (e.g., LONGi, JA Solar). 3) **Tech Innovators**: Perovskite players (e.g., Jinko Solar, First Solar).

**Risks**: Intensified competition, grid absorption limits, policy shifts, and installation shortfalls.