Technological disruption is a recurring theme in various industries, a principle that holds true across sectors from photography to energyThe story of Kodak illustrates this well; despite its dominance during the film era, Kodak was unable to withstand the rapid advancements that digital photography introducedSimilarly, the photovoltaic (PV) industry is experiencing its own waves of transformation driven by relentless technological advancements.

The pursuit of cost reduction and efficiency has always characterized the photovoltaic sectorA closer look at its recent history reveals that just in 2020, monocrystalline silicon wafers overtook polycrystalline counterparts, leading to a rapid decline in the market's reliance on polycrystalline solar cellsFollowing this, in an equally swift fashion, P-type solar cells were pushed aside by their N-type successors within a mere two yearsSuch changes underscore the fast pace of innovation where new technologies continuously replace their predecessors.

Today, even N-type solar cells are embroiled in their own competition, with several promising technologies such as TOPCon (Tunnel Oxide Passivated Contact), Bifacial Cell (BC), and Heterojunction Technology (HJT) vying for the forefrontWithin this dynamic market landscape, notable players like JinkoSolar and LONGi Green Energy have emerged, each pursuing divergent technological strategies that have significant implications for their competitive positioning.

JinkoSolar has notably adopted TOPCon technology, embarking on ambitious expansions of its production capabilities for this solar cell type between 2022 and 2023. In contrast, LONGi Green Energy has maintained a more cautious stance, adhering to a principle of “no expansion without leading,” opting not to follow suit in ramping up TOPCon capacityThe variance in strategic approaches has led to stark differences in capital expenditures

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In 2022, JinkoSolar's capital investments soared to approximately 14.9 billion Yuan, while LONGi’s expenditure stood at a comparatively modest 5 billion YuanEven as LONGi’s investment increased to 9.2 billion Yuan in 2023, it was still eclipsed by Jinko's 20.3 billion Yuan budget.

Today, TOPCon technology has established itself as the dominant solution among N-type solar cellsJinkoSolar's strategic pivot has borne fruit, enabling it to surpass LONGi Green Energy in component shipments, achieving an impressive 30.8 GW in the first half of 2023. Conversely, by the second quarter of 2024, LONGi found itself surpassed not only by Jinko but also by Trina Solar and JA Solar, sinking to fourth place in component shipments.

This downward shift illustrates the escalating challenges faced by LONGi Green Energy, whose market position appears increasingly precariousIn light of these threats, the company made a decisive shift towards banking on BC battery technology as its next-generation product line.

Unlike most of its peers who have flocked to TOPCon as the next leading technology path, LONGi has hesitantly evaluated its options, only finalizing its commitment to BC technology in September 2023. This begs the question: can this strategic gamble restore LONGi to its former market supremacy?

To analyze this development, we can assess it from three perspectives: product technology, capacity construction, and financial health.

First, examining product technology reveals that after committing to the BC pathway, LONGi swiftly escalated its research and development investments, increasing R&D expenditure to 2.283 billion Yuan in 2023, reflecting a strong commitment to innovationThe fruits of this labor started to materialize in October 2023, as LONGi introduced an array of HPBC (High-Efficiency Bifacial Cell) generation products tailored for various applications, showcasing impressive speed in product development

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The subsequent launch of the Hi-MO series based on the second-generation HPBC technology in 2024 marked a significant milestone, with the latest Hi-MO X10 achieving a record rated power of 670W—30W higher than mainstream TOPCon componentsFurthermore, LONGi asserts that under similar conditions, BC products generate approximately 6% more electricity than N-type TOPCon products, although this claim remains a point of contention among industry experts.

Secondly, we turn to capacity constructionThe intricate manufacturing process and advanced technical requirements of BC technology mean that capacity build-out across the industry is gradualAnnounced on July 13, 2024, LONGi has committed a total investment of 3.206 billion Yuan for its first phase, enabling an annual output of 12.5 GW for high-efficiency BC cellsBy the end of 2025, the total capacity across first and second-generation BC cells is projected to reach approximately 70 GWWith expectations that BC second-generation cells will constitute about one-third of total sales by 2025 and a complete transition to BC cells in the domestic market by the end of 2026, the company's strategy seems poised for significant growthComparatively, TOPCon’s capacity, including those under construction, is predicted to exceed 900 GW by the end of 2024, suggesting that the market might soon become saturated.

Turning to the latest fiscal results, we see that the persistent supply-demand imbalance and capacity mismatches have led to relentless price declines across the photovoltaic supply chain, significantly impacting industry leader LONGi Green EnergyIn the first three quarters of 2024, LONGi reported revenues of 58.59 billion Yuan, reflecting a 27.73% year-over-year declineThe company's profit margins suffered even more, with net profits plummeting by an astonishing 155.62%, resulting in a steep loss of 6.505 billion Yuan—marking one of the direst quarterly reports in the last decade.

Despite these negative trends, LONGi cleverly anticipated these challenges and fortified its financial position ahead of the storm, ending the third quarter of 2024 with a robust cash balance of 51.11 billion Yuan, significantly higher than Jinko’s 26.668 billion Yuan

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This financial buffer allows LONGi to pursue its BC technology strategy with greater flexibility.

Of course, while LONGi is actively working to regain its footing, Jinko is not idly watchingThe latter is also investing in BC technology research and development, having dedicated 90 million Yuan to BC initiatives in the first half of 2024. Plans to expand BC capacity are also in the works by 2025, with preparations to adjust pricing on par with TOPCon products.

Is Jinko’s move indicative of optimism regarding BC technology's future? The underlying motivation may be more about countering LONGi’s advances in the BC market than about genuine enthusiasm for the technology.

From a supply-demand perspective, increased capacity usually results in diminished product premiumsPresently, a shortage exists for BC products, which has allowed for premium pricingHowever, as the supply increases, market premiums may evaporate, leading to uncertainty surrounding LONGi’s potential returns should many players flock to the BC technology space.

Additionally, in early 2025, LONGi Green Energy faced legal troubles when accused of infringement related to certain patented technologies, facing demands for financial compensationAlthough the lawsuit was filed by a wholly-owned subsidiary of Jinko, the real contenders remain evident, revealing another layer of pressure as LONGi navigates both price competition and the looming threat of patent contention.

In light of these events, the path ahead for LONGi Green Energy is fraught with challenges, necessitating a careful approach to ensure its survival in an increasingly cutthroat market.

In summary, LONGi is making significant strides in its pursuit of BC technology, demonstrating promising progress in product development and capacity expansion

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