The downturn in the photovoltaic industry continues, with TCL Zhonghuan accumulating losses of 19 billion yuan over two years. Under significant pressure, founder Li Dongsheng has not given up. Instead, he is attempting to rebuild a growth strategy through management reshuffles, increased focus on the semiconductor sector, and integration of the photovoltaic industry chain.
Over the past two years, the company has reported substantial losses. In 2025, TCL Zhonghuan achieved revenue of 290.5 billion yuan, a slight increase of 2.22% year-on-year. However, it recorded a net loss attributable to shareholders of 9.264 billion yuan. This follows a loss of 9.818 billion yuan in 2024, bringing the total losses for the two-year period to over 19 billion yuan.
Although the loss narrowed by 5.65% in 2025 compared to 2024, the company has now experienced nine consecutive quarters of losses since the fourth quarter of 2023. This indicates a structural issue compounded by operational and industry challenges, rather than a short-term cyclical fluctuation.
The primary drag on performance has been the core photovoltaic business, which contributes over 78% of revenue but remains the largest source of losses. In 2025, the gross margin for photovoltaic silicon wafers was -19.44%, and for photovoltaic modules it was -6.22%. The overall photovoltaic business incurred a gross loss of nearly 3 billion yuan, meaning the company lost more money as it sold more products.
Specifically, the module business, which saw significant revenue growth over the past two years, remains trapped in a cycle of sacrificing price for volume. It has yet to achieve profitability and has further depressed overall profit levels.
A one-time asset impairment of 4.622 billion yuan also significantly impacted the 2025 results. This impairment, covering inventory write-downs and reductions in the value of fixed assets and goodwill, directly reduced total profit by over 3.9 billion yuan. This was primarily due to persistent industry overcapacity, a supply-demand imbalance, and the continued poor performance of subsidiary Maxeon.
If the core business losses represent a chronic issue, the impairment is akin to major surgery. The combined effect creates pressure that extends beyond the company itself.
The continuous losses at TCL Zhonghuan are not contained at the subsidiary level. They affect the financial statements and strategic direction of its ultimate parent company, TCL Technology. This pressure manifests in three key areas.
The most direct impact is financial, affecting profitability, cash flow, and asset quality—posing urgent challenges for TCL Technology.
On the surface, TCL Technology's 2025 results appeared strong, with total revenue of 184.211 billion yuan (up 11.7% year-on-year) and a net profit of 4.517 billion yuan (up 188.8% year-on-year). However, this performance was heavily reliant on the 8.01 billion yuan net profit contributed by its semiconductor display business (TCL China Star). The 9.264 billion yuan loss from TCL Zhonghuan remained a burden on the income statement, eroding profits from other segments. Based on TCL Technology's 29.91% stake in TCL Zhonghuan, the subsidiary's performance reduced TCL Technology's profits by approximately 2.771 billion yuan.
Regarding cash flow, TCL Zhonghuan's ability to generate cash is severely weakened. Its net cash flow from operating activities in 2025 was only 1.144 billion yuan, a decrease of nearly 60% year-on-year. Concurrently, TCL Technology's net cash flow from investing activities was -20.254 billion yuan, indicating substantial ongoing capital expenditure and creating significant pressure on fund allocation.
In terms of asset quality, the 4.622 billion yuan impairment at TCL Zhonghuan flowed directly into the consolidated financial statements, contributing to TCL Technology's total inventory write-downs of 5.54 billion yuan for the year. As of the end of 2025, TCL Technology's asset-liability ratio stood at 64.23%, remaining high and suggesting limited financing flexibility.
A deeper strategic pressure stems from the fact that TCL Zhonghuan's struggles undermine the core logic of TCL Technology's "new energy + semiconductor" dual-driver strategy, triggering chain reactions in market valuation and resource allocation.
TCL Technology's strategic design relies on these two sectors growing synergistically. While the semiconductor display business is currently robust—with 2024 revenue of 105.24 billion yuan (up 17.4% year-on-year), accounting for 57% of TCL Technology's total revenue, and an 11% market share in automotive displays—the photovoltaic segment, represented by TCL Zhonghuan, has failed to become a second growth engine. Instead, its persistent heavy losses have hindered strategic progress. The dual-driver model has effectively become a single-driver, with lost synergy and a disrupted strategic rhythm.
This dilemma has external repercussions. As of April 8, 2026, TCL Zhonghuan's stock price had fallen 27.31% from its yearly high, with a market capitalization of 34.9 billion yuan, shaking capital market confidence in the dual-driver strategy. To sustain TCL Zhonghuan's operations and transformation, TCL Technology has had to continuously allocate financial and human resources to it,客观上 squeezing development space for other business units. This imbalance in resource allocation is becoming an increasingly difficult problem to solve.
External industry competition adds another layer of pressure, making a breakthrough even more challenging.
The industry-wide downturn is not unique to TCL Zhonghuan. Tongwei Co., Ltd. is estimated to have lost 9-10 billion yuan in 2025, widening from the previous year. LONGi Green Energy Technology is projected to lose 6-6.5 billion yuan, and JA Technology expects a loss of 4.5-4.8 billion yuan.
The root cause of these widespread losses is severe overcapacity. Global silicon wafer and module capacity each exceeded 1000 GW in 2025, while global installation demand was only about 560-630 GW. This supply-demand mismatch has led to an almost unsolvable cycle of low-price competition.
Regulators have begun to intervene. The State Administration for Market Regulation has proposed measures to prevent "inward-rolling" competition in the PV industry, and the Ministry of Industry and Information Technology has designated 2026 as a critical year for industry governance. This policy window presents both an opportunity and added pressure. Finding a solution for TCL Zhonghuan is now Li Dongsheng's most urgent task.
Faced with losses exceeding 19 billion yuan over two years, Li Dongsheng has formulated a clear response strategy. This involves strengthening control through personnel changes, optimizing structure via business reorganization, preserving core advantages during the industry trough, and awaiting a cyclical turnaround.
On the evening of March 24, alongside the release of the 2025 annual report, TCL Zhonghuan announced a series of management changes.
The most notable departure was that of Shen Haoping, a pivotal figure who had been with the company for over 40 years and served as CEO for 17 years. Although he stepped down as CEO in August 2024, he remained Vice Chairman and a non-independent director. With the latest announcement, Shen formally resigned from his directorship, effectively exiting the core management team.
Another key change was the resignation of Wang Yanjun as CEO. He was succeeded by Ouyang Hongping from TCL China Star, who assumed the roles of CEO and legal representative, also acting as Chief Operating Officer. Wang Yanjun will now focus on the semiconductor materials business as Vice Chairman, contributing to long-term strategy. Concurrently, Zhang Haipeng, experienced in the PV sector, was appointed Senior Vice President to lead the new energy photovoltaic materials business.
This management overhaul had been anticipated. Over the past year, TCL Zhonghuan's board and senior executives have undergone multiple rounds of changes. Li Lina became Board Secretary in August 2025, and Yang Fan took over as CFO in December 2025. The appointment of TCL-affiliated executives to key positions solidifies the parent group's control over TCL Zhonghuan.
Parallel to personnel changes, business adjustments are underway, primarily focused on "increasing investment in semiconductors and stabilizing the photovoltaic business."
Semiconductor materials are a key area of focus for Li Dongsheng. On March 19, significant changes were registered for subsidiary Zhonghuan Lead. The company's registered capital increased from 5 billion yuan to approximately 5.394 billion yuan. Former Chairman and legal representative Shen Haoping stepped down, with Li Dongsheng assuming the chairmanship and Wang Yanjun becoming the legal representative.
TCL Zhonghuan's semiconductor materials business reported revenue of 5.707 billion yuan in 2025, a growth of 21.75% year-on-year. Current monthly production capacity for 12-inch silicon wafers has reached 700,000 pieces, with plans to expand to 1 million pieces per month by 2026. Its 8-inch polished wafers are supplied in volume to SMIC, and 12-inch lightly doped silicon wafers have passed certifications from TSMC and Infineon. An expansion project in Yixing has been included among Jiangsu Province's major projects. Li Dongsheng's plan is to use the growing contribution from this higher-margin business to gradually offset the losses from the photovoltaic segment.
Regarding the photovoltaic business, Li is not abandoning it but is opting to extend downstream and strengthen the value chain. An announcement on March 30, 2026, revealed that TCL Zhonghuan acquired a 66.34% controlling stake in Dawn Energy for 1.258 billion yuan through a combination of share transfer and capital increase. This move aims to leverage Dawn Energy's expertise in BC battery and module technology to build an integrated "wafer + cell + module" supply chain and position the company in the promising next-generation BC battery technology field.
Additionally, TCL Zhonghuan recently approved the use of up to 10 billion yuan in自有资金 to purchase financial products, aiming to optimize capital efficiency and support the parallel development of its two core businesses.
While the direction of Li Dongsheng's strategy is clear, significant challenges remain. The timing of an industry recovery is uncertain. Overcapacity and intense price competition persist, and the widespread losses among leading players show no fundamental improvement. If the industry slump continues, losses from TCL Zhonghuan's PV business will likely persist.
Furthermore, the pace of growth in the semiconductor business is unpredictable. The sector's characteristics—high technology intensity, heavy asset investment, and long development cycles—mean that capacity expansion and profit realization take time. It remains uncertain whether this segment can grow fast enough to compensate for the photovoltaic losses.
Another critical factor is TCL Technology's capacity to continue providing support. Ongoing financial assistance implies resource allocation倾斜, and there are inherent limits to funding and strategic flexibility when managing multiple business lines simultaneously.
In conclusion, the current challenges facing TCL Zhonghuan result from the dual impact of a downcycle in the industry and internal structural imbalances. Li Dongsheng's series of actions constitute a proactive restructuring effort during a low point. The management reshuffle aims to stem losses, while the increased focus on semiconductors and photovoltaic integration seeks to rebuild a sustainable growth model.
The outcome of this endeavor depends both on when the industry cycle reaches its bottom and on whether Li Dongsheng can successfully transform the business structure while continuing necessary support. Saving TCL Zhonghuan is not just about rescuing a subsidiary; it is about safeguarding the foundation of TCL Technology's "new energy + semiconductor" strategy. This battle is far from over.
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