Chinese manufacturer Tongwei has announced a substantial investment of RMB28 billion (US$3.9 billion) in the expansion of its silicon production capacity, defying concerns about potential overcapacity in the polysilicon industry in 2024.
The company outlined plans for a new facility in Ordos, Inner Mongolia, with an annual production target of 500,000 metric tons of industrial-grade silicon and 400,000 tons of polysilicon.
The ambitious project is structured in two phases, each anticipated to take 15-18 months for completion. The first phase, slated for conclusion by the end of December 2025, involves an investment of approximately RMB13-14 billion, resulting in a production capacity of around 200,000 tons for both industrial silicon and high-purity crystalline silicon.
The second phase, contingent on market conditions, aims to increase production capacity by an additional 300,000 tons for industrial silicon and 200,000 tons for high-purity crystalline silicon.
Tongwei acknowledged potential challenges, emphasizing that unsecured production factors could impact the project's initiation and production, leading to adjustments in the construction timeline. Collective efforts to meet energy consumption targets by the end of June 2024 will be crucial, and failure may prompt proposals for the unconditional termination of the project.
This move by Tongwei comes against the backdrop of declining silicon material prices, with the average transaction price of polysilicon falling from RMB170,000 per ton to approximately RMB70,000 per ton throughout last year.
Interestingly, this expansion aligns with a similar trend in the industry, as Daqo Energy unveiled a RMB15 billion investment plan for a new silicon production plant in December 2023, emphasizing a commitment to expanding high-purity polysilicon production.
The concurrent expansions by Tongwei and Daqo Energy signal a noteworthy development in the market, as major players navigate challenges posed by the downturn in silicon material prices.