Photovoltaics Industry 2026 Strategy: "Anti-Involution" Accelerates Supply-Demand Reshaping; Prioritize New Technologies and Scenarios

Date: January 6, 2026
Sector: Power Equipment & New Energy / Photovoltaics (PV)
Analysts: Liu Qiang (S1190522080001), Zhong Xincai (S1190524110004)
Source: Pacific Securities Research Institute

Executive Summary

The global photovoltaic (PV) industry is standing at a critical inflection point as we enter 2026. After enduring over three years of intense "involutionary" competition characterized by severe overcapacity, plummeting prices, and widespread profitability erosion, the sector is undergoing a profound structural transformation. This report posits that the industry is transitioning from a phase of chaotic expansion to one of disciplined consolidation, driven by policy-induced supply-side reforms ("anti-involution"), rapid technological iteration, and the accelerating parity of solar-plus-storage systems.

Our core investment thesis for 2026 rests on three pillars:
1. Supply-Demand Reshaping via "Anti-Involution": Since mid-2025, regulatory and industry-led initiatives to curb irrational competition have gained momentum. Capital expenditure has been curtailed, production cuts are being implemented, and pricing across the main value chain—from polysilicon to modules—has begun to stabilize and recover. We anticipate a continued improvement in the supply-demand balance throughout 2026, leading to a gradual repair in corporate profitability.
2. Technological Imperative: The Low/No-Silver Era: With silver prices surging by approximately 135% year-over-year to nearly $70/oz by late 2025, cost reduction through material substitution has become existential. The rapid adoption of low-silver and no-silver metallization technologies (such as silver-coated copper pastes and pure copper solutions) is reshaping the competitive landscape. Module leaders who successfully integrate these technologies, particularly in TOPCon and Back Contact (BC) architectures, are poised to regain margin superiority and market share.
3. Diversification and New Growth Curves for Auxiliary Materials: Pressure from the main chain has historically compressed margins for auxiliary material suppliers (encapsulants, pastes, glass). However, leading firms in these segments are successfully diversifying into non-PV sectors (e.g., semiconductor materials, electronic films) and leveraging new PV technologies. As the PV cycle bottoms out and these second growth curves mature, we expect a significant earnings rebound for top-tier auxiliary material companies.

While global installed capacity growth may moderate in 2026 due to high bases in China and policy shifts in the US and Europe, the long-term trajectory remains robust. The integration of energy storage is mitigating grid congestion issues, unlocking new demand in core markets. Furthermore, emerging applications such as space-based PV and the commercialization of perovskite technologies offer substantial long-term upside.

We maintain an Overweight rating on the PV sector for 2026. We recommend investors focus on three key directions: (1) Module leaders with superior low/no-silver technology integration (LONGi Green Energy, Jinko Solar, Aiko Solar, Tongwei); (2) Companies with strong solar-storage synergy capabilities (Trina Solar, Jinko Solar, LONGi, JA Solar); and (3) Auxiliary material leaders with successful diversification and technological breakthroughs (DKEM, Polymer Material, Foster).

Key Takeaways

1. Global Demand: A "Pause before the Leap" Amidst Solar-Storage Parity

The global PV demand landscape in 2026 is characterized by a temporary deceleration in growth rates, primarily driven by normalization after a surge in 2025 and structural adjustments in key markets. However, this slowdown is viewed as a healthy correction rather than a structural decline, setting the stage for renewed high-speed growth driven by solar-storage parity.

1.1 Global Installation Forecasts

We estimate global new PV installations to reach approximately 600 GW in 2025 and 610 GW in 2026.
* 2025 Growth: ~13.21% YoY.
* 2026 Growth: ~1.67% YoY.

The modest growth in 2026 reflects the maturation of core markets (China, Europe, US) where installation bases are already high. However, the underlying driver of demand is shifting from pure subsidy-driven expansion to economic viability through Solar-Storage Parity. As battery costs decline and grid integration improves, the combined levelized cost of energy (LCOE) for solar-plus-storage systems is becoming competitive with fossil fuels in major economies, ensuring sustainable long-term demand.

1.2 Regional Market Dynamics

🇨🇳 China: Post-Policy Adjustment and Storage Integration
* Policy Impact: The implementation of "Document No. 136" in 2025 triggered a significant rush-to-install in the first five months of the year. May 2025 saw a record monthly addition of 92.92 GW, representing a 388.03% YoY increase and a 105.48% MoM increase.
* 2026 Outlook: Following this front-loaded demand, monthly installations have slowed considerably. Given the high base effect and the full impact of Document No. 136, we project a potential negative growth in China’s new installations for 2026.
* Long-term Driver: The acceleration of energy storage deployment is crucial. As storage costs fall and grid flexibility improves, the constraint of grid absorption is alleviated, allowing PV installations to resume growth after this observation period.

🇺🇸 United States: Subsidy Cliff and Supply Chain Restructuring
* Policy Shift: The "Big and Beautiful Act," enacted in July 2025, tightened the conditions for the Investment Tax Credit (ITC). Crucially, the eligibility criterion shifted from "commencement of construction" to "placed in service." Additionally, the residential solar credit (25D) expires in 2025, while commercial credits (48E, 45Y) are accelerated to end by 2027.
* Rush-to-Install: These changes, combined with the closing window for Southeast Asian tariff exemptions, spurred a Q3 2025 installation boom. US solar additions reached 11.7 GW in Q3 2025 (+49% QoQ), bringing the nine-month total to over 30 GW.
* Supply Chain: US domestic module capacity is ramping up rapidly. However, significant bottlenecks remain in the upstream segments (polysilicon, wafers, cells). The economic viability of local upstream production remains the key variable, with Corning’s wafer production economics serving as a critical benchmark for the industry.

🇪🇺 European Union: Grid Constraints and the Rise of Storage
* Demand Slowdown: EU-27 installations are expected to plateau. SolarPower Europe data indicates installations of 63.81 GW (2023), 65.69 GW (2024), and a slight decline to 65.10 GW (2025), representing a -0.75% YoY change.
* Headwinds: Several key markets (Germany, Italy, Netherlands) have reduced or eliminated rooftop subsidies and net-metering schemes. More critically, high renewable penetration has led to grid congestion, negative electricity prices, and curtailment risks, dampening project yields.
* Storage as a Catalyst: The focus is shifting from hardware volume to system solutions. Electrochemical storage is seen as the essential companion to PV. Cumulative storage installations in Europe reached ~35 GW by end-2024 and are projected to reach 163 GW by 2030 (per EMMES9.5). This synergy will unlock long-term PV demand by resolving grid integration issues.

🌍 Middle East & North Africa (MENA): High-Growth Frontier
* Robust Growth: Benefiting from abundant solar resources and strong national transition agendas, the MENA region is a high-growth hotspot. 2024 installations reached ~14.5 GW. Under neutral and optimistic scenarios, double-digit growth is expected through 2027.
* Local Content Requirements: Geopolitical considerations and supply chain security concerns are driving local manufacturing mandates. Turkey leads in module capacity, while Saudi Arabia, UAE, and Oman are developing integrated supply chains.
* Investment Opportunity: Tracker and mounting structure capacities are landing first. Trina Solar and CITIC Bo’s tracker facilities began production in 2025, with other segments expected to follow in 2026.

2. Supply Side: "Anti-Involution" Drives Consolidation and Price Recovery

The defining narrative of the 2024-2025 period was severe overcapacity. By 2024, global capacity far exceeded demand, leading to unsustainable price wars and widespread losses across the value chain. In 2025, the industry and regulators initiated a decisive shift towards "anti-involution" (breaking irrational competition).

2.1 Policy and Industry Discipline

• Regulatory Signal: In June 2025, the People's Daily published an article explicitly criticizing "involutionary competition" in the PV sector, signaling high-level government support for supply-side discipline.
• Capital Expenditure Cuts: Major players have significantly slashed CAPEX plans for new capacity. Existing projects are being delayed or cancelled.
• Production Controls: Industry associations and leading firms have coordinated production cuts to align output with demand, preventing further inventory buildup.

2.2 Capacity Overview and Chinese Dominance

Despite global expansion efforts, China remains the undisputed center of gravity for PV manufacturing. The table below illustrates the scale of Chinese dominance as of 2024:

Source: CPIA, Pacific Securities

The sheer scale of Chinese capacity means that any meaningful supply-side reform must originate from within China. The recent "anti-involution" measures are effectively acting as a supply-side clearing mechanism, forcing inefficient capacity out of the market and allowing remaining players to restore pricing power.

2.3 Polysilicon: Price Stabilization through Self-Discipline

• Price Trend: After hitting rock bottom in early 2025, polysilicon prices have recovered to approximately 52 RMB/kg by mid-2025.
• Mechanism: This recovery is not driven by a demand spike but by supply contraction. Leading producers, facing sustained losses, implemented voluntary production cuts in Q4 2025.
• Outlook: As industry self-discipline strengthens and additional regulatory measures take effect, we expect polysilicon prices to stabilize and gradually rise, supporting the profitability of the entire upstream chain.

2.4 Modules: Concentration and Technological Differentiation

The module segment is witnessing a divergence in performance based on technological leadership and cost control.

• Shipment Trends (H1 2025):

  • Top 3 Shippers: ~115.20 GW
  • Top 5 Shippers: ~171.72 GW (+3.57% YoY, driven by Tongwei’s growth)
  • Top 10 Shippers: ~228.33 GW
  • Observation: While total shipments for the top tier remained relatively flat YoY, the internal ranking is shifting. Companies with better cost structures and newer technologies are gaining share.

• Market Share Evolution (2021-2025 H1):

Source: Company Announcements, Pacific Securities

• LONGi’s Resurgence: LONGi Green Energy has demonstrated strong momentum with its Back Contact (BC) technology. In H1 2025, its battery/module shipments reached 39.57 GW (+26.42% YoY), with BC shipments accounting for 8-9 GW. The premium for BC products in both utility-scale and distributed markets is supporting this growth.

Deep Dive: Technology Drivers – The Low/No-Silver Revolution

Technological iteration is the primary engine for overcoming cyclical downturns. In 2026, the most critical technological trend is the transition away from silver in metallization processes, driven by unprecedented silver price inflation.

1. The Silver Price Crisis

• Price Surge: As of December 23, 2025, the London spot price for silver reached $69.74/oz, a staggering 135.53% increase compared to the same date in 2024.
• Cost Impact: According to CPIA data from December 2024, silver paste accounted for 27.27% of cell production costs. With the doubling of silver prices, this proportion has likely increased significantly, squeezing cell and module margins.
• Strategic Imperative: With downstream demand unable to absorb full price pass-throughs, reducing silver consumption is no longer optional—it is a survival requirement.

2. Technological Solutions: Low-Silver and No-Silver

A. TOPCon: Silver-Coated Copper and Pure Copper Pastes

TOPCon remains the mainstream technology, and its cost reduction path relies heavily on replacing silver with copper.
* Silver-Coated Copper (Ag-Cu): This technology involves coating copper particles with a thin layer of silver to prevent oxidation and improve conductivity.
* Pure Copper: The ultimate goal is to eliminate silver entirely.
* DKEM’s Breakthrough: DKEM (300842.SZ) has accelerated the adoption of a High-Temperature Silver Seed Layer + Low-Temperature Silver-Coated Copper solution for TOPCon cells.
* Mechanism: The silver seed layer provides excellent ohmic contact and acts as a barrier against copper diffusion into the silicon substrate, which can degrade cell performance.
* Benefit: This hybrid approach significantly reduces silver usage while maintaining high efficiency and reliability, offering a pragmatic near-term solution for mass production.

B. Back Contact (BC) Technology: The Premium Segment

BC technology, known for its high efficiency and aesthetic appeal (no front grid lines), is gaining traction, particularly in distributed and high-end markets.
* Leading Players:
* LONGi Green Energy:
* Capacity: Reached 50 GW of BC capacity by end-2025.
* Shipments: Expected to ship 20 GW of BC modules in 2025, representing 25% of its total module shipments.
* Cost Reduction: In 2026, LONGi plans to accelerate the use of low-silver and base-metal schemes in BC production, further narrowing the cost gap with TOPCon.
* Aiko Solar:
* Shipments: ABC module shipments expected to exceed 18 GW in 2025.
* Expansion: The Jinan facility is ramping up, with total ABC capacity projected to reach 28 GW by early 2026.
* Yibin Yingfa (Yingfa Ruineng):
* Strategic Partnership: Signed a strategic agreement with a leading BC player (implied LONGi) in late 2024.
* Milestone: Commenced trial production of its first 6 GW N-type xBC cell line in May 2025, becoming the first specialized third-party BC cell supplier. This validates the outsourcing model for BC technology, allowing module makers to scale without bearing all capex burdens.

Source: Company Websites, Public Accounts, Pacific Securities

3. Emerging Frontiers: Space PV and Perovskites

A. Space-Based Photovoltaics

The convergence of aerospace expansion and PV technology is creating a new niche market.
* Launch Frequency: Global space launches reached 263 in 2024 (+18% YoY). SpaceX alone accounted for 138 launches (>50% of global total).
* Starlink V3: Starting in 2026, SpaceX’s Starlink V3 satellites will feature significantly larger solar wings.
* Demand Driver: The rise of "computing satellites" (satellites with onboard AI/data processing capabilities) requires higher power density, driving demand for high-efficiency, lightweight space-grade solar cells.
* Long-term Vision: While currently small, the potential for space-based solar power stations (SBSP) and the proliferation of low-earth orbit (LEO) constellations provide a high-certainty growth vector for specialized PV manufacturers.

B. Perovskite Solar Cells (PSC)

Perovskite technology is moving from lab-scale to industrial-scale production.
* GW-Scale Ramp-up: 2025-2026 is the pivotal period for GW-level capacity commissioning.
* JOC (BOE): 500MW line operational since Dec 2024.
* GCL Perovskite: 300MW single-junction and 200MW tandem lines; tandem production started Oct 2025.
* Microquanta (Jidian Guangneng): 1GW line operational since Feb 2025.
* Upcoming: RenShine (1GW by June 2026), CATL (GW-level by 2026), Huasheng & New Time (1GW by March 2026).
* Reliability Breakthroughs: Historically, stability was the main hurdle. Leading firms are now offering credible warranties:
* Microquanta: 25-year linear power output warranty; 12-year material/process warranty.
* CNNC Optoelectronics: 25-year linear power output warranty; 15-year material/process warranty.
* Implication: The successful scaling of perovskite, especially in tandem with crystalline silicon, promises a step-change in efficiency limits, potentially disrupting the current TOPCon/BC dominance in the late 2020s.

Auxiliary Materials: Turning Point and Diversification

The auxiliary materials sector (pastes, encapsulants, glass) has suffered from margin compression due to the intense pressure transmitted from the main chain (cells/modules). However, 2026 marks a turning point driven by two factors: (1) the stabilization of the main chain, and (2) successful diversification into non-PV businesses.

1. Conductive Pastes: Capturing the Low-Silver Dividend

Market Dynamics:
In 2025, paste manufacturers faced declining net profits as cell makers demanded lower prices. However, the shift to low-silver/no-silver technologies creates a new value proposition. Companies that have mastered the formulation of silver-coated copper pastes or pure copper inks will command higher technical premiums and capture market share.

Corporate Strategies:
* DKEM (300842.SZ):
* PV Business: Leader in low-silver TOPCon pastes.
* Diversification: Acquired 62.5% of Jiangsu Jingkai Semiconductor, entering the memory chip packaging and testing sector. This provides a high-margin second growth curve unrelated to PV cyclicality.
* Polymer Material (688503.SH):
* PV Business: Strong position in silver paste market.
* Diversification: Acquiring the mask substrate business from SK Enpluse, entering the semiconductor photomask substrate market. This move fills a critical gap in the domestic semiconductor supply chain.

Financial Outlook:
As low-silver pastes penetrate the market in 2026, these leaders are expected to see margin expansion. The semiconductor ventures will begin contributing to revenue, reducing overall earnings volatility.

2. Encapsulants (Films): Profit Repair and Electronic Materials

Market Dynamics:
* Q3 2025 Recovery: Encapsulant makers saw a profit rebound in Q3 2025. This was driven by rising upstream resin prices (allowing for better pass-through) and the general "anti-involution" sentiment improving pricing discipline.
* 2026 Outlook: With resin prices stabilizing at a higher level and PV demand recovering, film prices and margins are expected to improve YoY.

Corporate Strategies:
* Foster (603806.SH):
* Core PV: Global leader in EVA/POE films.
* Second Curve: Deeply entrenched in electronic materials (photosensitive dry film, FCCL, coverlay). These products serve the PCB and display industries. As domestic substitution accelerates in China’s electronics sector, this business provides stable, high-quality earnings growth.
* Hiuv (688680.SH) & Sway Technical (603212.SH):
* Leveraging their polymer film expertise to expand into other industrial applications, creating a diversified revenue base that resonates with the broader PV recovery.

3. PV Glass: Supply Contraction Supports Prices

Market Dynamics:
* Supply Discipline: The PV glass sector has seen significant capacity reductions due to industry self-discipline and environmental regulations. By Q3 2025, effective supply had contracted.
* Price Recovery: In September 2025, glass prices rose MoM, supported by improved module operating rates and better pricing power.
* 2026 Outlook: While demand may fluctuate, the constrained supply side (due to high energy costs and regulatory hurdles for new furnaces) combined with main chain recovery will support glass prices and profitability. Leaders like Flat Glass (601865.SH) and Kaisheng New Energy are well-positioned to benefit from this tighter balance.

Investment View and Recommendations

The PV industry in 2026 is not merely recovering; it is evolving. The era of blind capacity expansion is over. The new cycle is defined by technological superiority, cost innovation (specifically in material usage), and strategic diversification.

We identify three distinct investment themes that offer superior risk-adjusted returns:

Theme 1: Technology Leaders in Low/No-Silver Transition

Companies that have successfully integrated low-silver or no-silver technologies into their mass production lines will enjoy a structural cost advantage. This allows them to maintain margins even if module prices remain subdued, and to gain market share from laggards.

• LONGi Green Energy (601012.SH): BUY.
  • Logic: Leader in BC technology with 50GW capacity. Rapidly adopting low-silver schemes for BC. Strong brand premium in distributed markets. Financials expected to turn positive in 2026 (EPS est. 0.41 RMB).
• Jinko Solar (688223.SH): Unrated (Positive).
  • Logic: Top shipment volume. Aggressive in TOPCon cost reduction and silver-coated copper adoption. Strong global channel presence.
• Aiko Solar (600732.SH): Unrated (Positive).
  • Logic: Pure-play ABC technology leader. High efficiency products command premiums. Capacity expansion in Jinan drives volume growth.
• Tongwei Co. (600438.SH): Unrated (Positive).
  • Logic: Integrated giant with strong cost control in polysilicon and cells. Beneficiary of upstream price stabilization.

Theme 2: Solar-Storage Synergy

As grid constraints become the primary bottleneck for PV growth, companies that offer integrated solar-plus-storage solutions will win more projects, especially in Europe and emerging markets.

• Trina Solar (688599.SH): Unrated (Positive).
  • Logic: Strong tracker business (benefiting from MENA growth) and integrated storage solutions.
• JA Solar (002459.SZ): Unrated (Positive).
  • Logic: Conservative financial management and steady technological progress. Growing presence in storage integration.
• LONGi & Jinko: Also benefit from this theme due to their comprehensive product portfolios.

Theme 3: Auxiliary Material Leaders with Diversification

These companies offer a hedge against pure PV cyclicality through their entry into semiconductor and electronic materials markets. Their earnings recovery is driven by both PV bottoming out and new business growth.

• Foster (603806.SH): BUY.
  • Logic: Dominant market share in films. High-growth electronic materials business provides valuation re-rating potential. Stable dividend payer. EPS est. 0.62 RMB in 2026.
• DKEM (300842.SZ): Unrated (Positive).
  • Logic: Direct beneficiary of the low-silver paste trend. Semiconductor acquisition adds significant upside optionality. High EPS growth expected (3.06 RMB in 2026).
• Polymer Material (688503.SH): Unrated (Positive).
  • Logic: Similar to DKEM, benefiting from paste tech upgrades and semiconductor mask substrate entry.

Financial Predictions and Valuation

The table below summarizes our earnings estimates and valuation metrics for key covered companies. Note that for unrated companies, we utilize iFind consensus estimates.

Source: iFind, Xiening, Company Announcements, Pacific Securities

Valuation Commentary:
* Module Makers: Most major module makers are trading at forward P/E ratios of 20-30x for 2026. Given the expected earnings turnaround from negative/low bases in 2025, these valuations appear reasonable, reflecting the uncertainty of the recovery pace. LONGi’s higher multiple reflects its technological premium in BC.
* Auxiliary Materials: DKEM and Polymer Material trade at higher multiples (20-30x) but justify this with higher expected EPS growth rates driven by technological substitution and new business lines. Foster trades at a more moderate 23x, offering a balanced risk-reward profile with its diversified income streams.

Risks / Headwinds

Investors should be aware of the following risks that could impede the industry’s recovery or affect individual company performance:

1. Technology Upgrade Misses:

   • The transition to low-silver/no-silver technologies or BC/perovskite scales is complex. If yield rates do not improve as expected, or if reliability issues emerge (e.g., copper diffusion in cells, perovskite degradation), companies heavily invested in these technologies may face write-downs and loss of competitive edge.
   • Impact: High for Aiko, LONGi, DKEM, Polymer Material.

2. Slower-than-Expected PV Installations:

   • Our forecast assumes a steady recovery in demand. However, if global macroeconomic conditions deteriorate, or if interest rates remain high, financing costs for PV projects could rise, dampening demand.
   • Specific policy risks: Further delays or cancellations of subsidies in Europe or unexpected trade barriers in the US could disrupt shipment plans.
   • Impact: Broad negative impact on all sector participants.

3. Intensified Industry Competition:

   • Despite "anti-involution" efforts, there is a risk that some players may break ranks to clear inventory, reigniting price wars.
   • New entrants in the perovskite or BC space could lead to overcapacity in these specific niches faster than anticipated.
   • Impact: Margin compression for all, particularly those with higher cost structures.

4. Supply Chain Disruptions:

   • Geopolitical tensions could disrupt the flow of materials (e.g., silver, copper, polysilicon) or finished goods. Trade restrictions on Chinese PV products in Western markets remain a persistent threat.
   • Impact: Volatility in costs and revenues for export-oriented companies (Jinko, Trina, JA Solar).

5. Grid Integration Bottlenecks:

   • If energy storage deployment lags behind PV installations, grid curtailment rates may rise, reducing the effective utilization hours of PV plants and hurting project economics. This could slow down new order placements.
   • Impact: Negative for long-term demand growth, particularly in Europe and China.

Sector Outlook and Rating

Sector Rating: Overweight (Positive)

We believe the PV sector has passed the worst of the cycle. The combination of policy-driven supply discipline, technological cost reductions, and the structural growth of solar-storage parity creates a favorable environment for selective investment in 2026.

• Short-Term (6 Months): Expect volatility as the market digests Q4 2025 and Q1 2026 earnings, which may still reflect lingering weakness. However, price stabilization signals will provide support.
• Medium-Term (12-18 Months): As low-silver technologies scale and auxiliary material diversification bears fruit, earnings visibility will improve. We expect a re-rating of companies with proven technological moats.
• Long-Term: The PV industry remains a cornerstone of the global energy transition. The innovations in BC, perovskite, and space PV ensure that the sector will continue to offer high-growth opportunities beyond traditional terrestrial installations.

Investment Strategy:
* Accumulate on Dips: For high-conviction names like LONGi and Foster.
* Monitor Tech Milestones: Keep close watch on the yield rates of BC and perovskite lines, and the adoption rate of silver-coated copper pastes.
* Diversify Exposure: Balance exposure between module integrators (for beta) and auxiliary material specialists (for alpha from tech/diversification).

Appendix: Detailed Analysis of Key Companies

(Note: The following section provides deeper operational context for the recommended stocks, synthesizing data from the report.)

1. LONGi Green Energy (601012.SH)

• Core Thesis: Turnaround play driven by BC technology leadership.
• Operational Highlights:
  • BC Capacity: 50 GW by end-2025. This scale allows for significant learning curve effects and cost reductions.
  • Product Mix: 25% of shipments are BC, which carry higher margins. The aesthetic advantage makes LONGi dominant in the high-value distributed market.
  • Cost Roadmap: 2026 focus on integrating low-silver metallization into BC lines. This addresses the primary cost disadvantage of BC vs. TOPCon.
• Financials: Expected to swing from a loss in 2025 (-0.59 EPS) to profit in 2026 (0.41 EPS). The market is pricing in this recovery, but execution risk remains.

2. Foster (603806.SH)

• Core Thesis: Defensive growth with optionality.
• Operational Highlights:
  • PV Films: Market leader with stable cash flows. Benefit from industry consolidation.
  • Electronic Materials: Photosensitive dry films and FCCL are critical for PCB manufacturing. As China pushes for semiconductor/electronics self-sufficiency, Foster is a key beneficiary. This business is less cyclical than PV.
• Financials: Steady EPS growth (0.48 -> 0.62 -> 0.82). Low volatility makes it an ideal core holding for institutional portfolios.

3. DKEM (300842.SZ)

• Core Thesis: High-growth tech play.
• Operational Highlights:
  • Paste Innovation: The silver-seed/copper-paste solution is a near-term winner for TOPCon manufacturers looking to cut costs without redesigning entire lines.
  • Semiconductor Pivot: Acquisition of Jiangsu Jingkai opens the door to the memory chip testing market. This is a high-barrier, high-margin industry.
• Financials: High EPS growth expected (1.32 -> 3.06). Valuation is rich but justified by the dual-engine growth story.

4. Jinko Solar (688223.SH)

• Core Thesis: Volume leader with global reach.
• Operational Highlights:
  • Scale: Largest shipper globally. Benefits from economies of scale in procurement and manufacturing.
  • Global Channels: Strong presence in the US and Europe, allowing it to capture higher-margin overseas sales despite trade barriers.
  • Storage: Increasingly bundling storage with modules, enhancing value proposition.
• Financials: Modest EPS recovery expected. Stock serves as a proxy for overall industry volume recovery.

Conclusion

The photovoltaic industry in 2026 is emerging from a period of painful adjustment into a new era of quality-focused growth. The "anti-involution" campaign has laid the groundwork for healthier pricing and profitability. Simultaneously, the urgent need to reduce silver consumption has sparked a wave of technological innovation that will differentiate winners from losers.

For institutional investors, the key is to look beyond simple capacity numbers and focus on technological moats (BC, Low-Silver), integration capabilities (Solar+Storage), and business diversification (Semiconductor materials). The companies highlighted in this report—LONGi, Foster, DKEM, and their peers—are best positioned to navigate the remaining headwinds and capitalize on the next leg of the solar revolution.

We recommend a constructive stance on the sector, prioritizing quality and innovation over pure beta exposure. The "plum blossoms" indeed come from the bitter cold; the survivors of this cycle will be stronger, more efficient, and more profitable.

Disclaimer: This report is based on the research provided by Pacific Securities. All data, forecasts, and ratings are subject to change based on market conditions. Investors should conduct their own due diligence. This document is for informational purposes only and does not constitute financial advice.