Analysis of Q3 Solar Power Earnings in China: Eight Major Companies Report Combined Loss of 27.7 Billion Yuan, Aiko Solar Achieves Solo Profitability

The 2026 third-quarter financial reports for China’s solar power industry have all been disclosed. On the surface, the main industry chain still appears to be mired in losses. However, when the results are broken down by individual quarter and product composition, clues of structural improvement emerge that run counter to the term “losses.”

According to data compiled by Securities Daily, the combined revenue for January through September of the eight major solar industry chain companies—LONGi Green Energy (601012.SS), Tongwei Co. (600438.SS), JinkoSolar (688223.SS), Trina Solar (688599.SS), JA Solar (002459.SZ), TCL Zhonghuan (002129.SZ), Aiko Solar (600732.SS), and Daqin New Energy—was approximately 256.6 billion yuan (about 6.1 trillion yen), with a combined net loss of approximately 27.7 billion yuan (about 660 billion yen). Among these, five companies saw their losses expand year-on-year, while three saw a reduction.

The contraction in demand is the direct cause of the performance pressure. China’s domestic new solar installations from January to September 2026 totaled 110.83 GW, a 53.9% decrease from the same period last year. Module prices have continued to remain at low levels, and the industry’s supply-demand imbalance has not been fundamentally resolved. JA Solar’s management explicitly stated in their earnings analysis that, due to the impact of the supply-demand imbalance, market competition has intensified, and solar module prices have remained at low levels, resulting in continued losses.

While narrowing quarterly losses is a common trend, there are clear differences in the pace of improvement.

Narrowing the observation period to the third quarter, significant differences in the recovery pace among the eight major companies became apparent. Aiko Solar was the only company to achieve a standalone quarterly profit, with its net profit attributable to shareholders of the listed company in the third quarter reaching 44.5666 million yuan (approximately 1.1 billion yen), marking a turn to profitability both year-on-year and quarter-on-quarter. The gross margin rose to 13.31% in the third quarter, up from 7.2% in the first quarter and 8.39% in the second quarter, marking the third consecutive quarter of improvement. The company attributed this shift to the differentiated premium of its All Back Contact (ABC) modules in overseas markets. Overseas selling prices maintained a premium of 10% to 50% over standard Tunnel Oxide Passivation Contact (TOPCon) products, and its order backlog is already filled through the first half of 2027.

JinkoSolar’s third-quarter loss was 290 million yuan (approximately 6.9 billion yen), an 83% reduction from the second quarter. LONGi’s third-quarter net loss was 1.029 billion yuan (approximately 24 billion yen), a 41.66% decrease from the previous quarter. JA Solar reported a loss of 974 million yuan (approximately 23 billion yen), a 39% reduction from the previous quarter. TCL Zhonghuan’s third-quarter net loss was 1.35 billion yuan (approximately 32 billion yen), a 13.2% improvement from the previous quarter, while its net profit attributable to shareholders after deducting non-recurring gains and losses improved by 40.4% quarter-on-quarter. Tongwei reported a loss of 1.639 billion yuan (approximately 39 billion yen), down from 2.675 billion yuan (approximately 64 billion yen) in the second quarter. In contrast, Trina Solar swung from a slight profit of 13.2067 million yuan (approximately 310 million yen) in the second quarter to a loss of 1.672 billion yuan (approximately 40 billion yen) in the third quarter.

Note: Data is based on each company’s third-quarter financial results. Year-on-year comparisons are based on net profit attributable to shareholders of the parent company.

Improvements in cash flow are also noteworthy. LONGi’s net operating cash flow in the third quarter turned positive at 2.35 billion yuan (approximately 56 billion yen). JA Solar’s net cash flow from operating activities in the third quarter was 3.12 billion yuan (approximately 74 billion yen), a significant improvement from the previous quarter and a new record for a standalone quarter within the year; the cumulative total for January to September was 3.981 billion yuan (approximately 95 billion yen). Tongwei’s third-quarter operating cash flow was 1.915 billion yuan (approximately 46 billion yen), maintaining positive net inflows for the second consecutive quarter.

Advanced production capacity marks the watershed for recovery

Wanlian Securities investment advisor Qu Fang told reporters that while narrowing losses is a common trend, the trajectory and quality of this improvement are increasingly diverging along technological routes and product mix.

LONGi’s financial results offer a sample for observing this divergence. Module shipments for the first three quarters totaled 48.61 GW, with back-contact (BC) modules accounting for over 65% of shipments. The share of BC modules in overseas and distributed markets rose significantly. The gross margin of BC modules in the third quarter increased by 6.27 percentage points compared to the first half of the year. Qu noted that the shift to positive cash flow amid depressed solar product prices indicates that the company’s pricing power and collection capabilities have withstood the test, making this metric more informative than the reported net loss.

Ding Bingzhong, partner at Shanghai Jimao Asset Management Co., Ltd., stated that the increase in gross margin is the primary contributor to the path toward profitability. This is not profit squeezed out through management efficiency or cost cuts, but rather the direct financial realization of product pricing power. In his view, manufacturing capacity that has already completed or is nearing completion of its transition to advanced production capabilities for the current technology generation is the first to qualify for financial recovery.

A research report by CICC provides a different interpretation. Over the past decade, competition in the solar manufacturing stage has been characterized by homogenization, with limited differences between top-tier and second- and third-tier players. However, differentiation has become apparent at the current cyclical bottom. Both BC and TOPCon 3.0 require significant investment, and most second- and third-tier companies lack the financial and technical capacity to upgrade their production lines. JinkoSolar disclosed that in the third quarter, the retrofitting of TOPCon 3.0 production lines and the ramp-up of production capacity progressed smoothly, leading to continuous optimization of production costs. The shipment ratio of high-power products further increased, with the Feihu 3 module accounting for more than one-third of shipments.

Mandatory national standards solidify differentiation as an entry barrier

As market-driven differentiation advances, the three mandatory national standards scheduled to take effect on January 1, 2027, are viewed by the industry as a critical milestone that will solidify differentiation into entry barriers.

According to a research report by Huatai Securities, the specific details of the three mandatory national standards were published on July 22, 2026. These standards cover energy consumption for silicon raw materials, energy consumption for silicon wafers, and energy efficiency grades for modules and inverters, collectively raising the rigid entry barriers across the four main stages of the value chain: silicon raw materials, silicon wafers, cells, and modules. The report assesses that the 2027 mandatory national standards will accelerate supply-side exit. Companies that possess existing high-efficiency production capacity and continue to meet the standards even after the tightening of energy consumption requirements are highly likely to be the first to experience revenue improvement.

During an investor exchange in September, Tongwei’s management specifically referenced the timeline of January 2027. Management, including Chairman Liu Shuqi, explained that while the supply-demand imbalance in the industry chain has not significantly eased at this stage, the implementation of the “anti-involution” policy (curbing excessive competition) and marginal improvements in domestic and international demand led to a slight recovery in prices for key stages of the industry chain in August. They stated that with the official enforcement of national standards on energy consumption and energy efficiency starting in January next year, lagging production capacity in the industry will gradually exit, and the market environment is expected to improve further.

The contraction in upstream silicon raw materials is already reflected in the data. According to data from the Silicon Industry Branch, the operating load of the polycrystalline silicon industry in October is expected to drop to approximately 35%, with production volume projected at 105,000 tons, a month-on-month decrease of about 12.9%. Industry inventory at the end of September stood at approximately 572,000 tons. Tongwei explained that the silicon raw material side will continue to adhere to the principle of “orderly production restraint” and will dynamically adjust production status in future dry seasons based on comprehensive factors such as cost elements and market conditions. On the cell and module side, the company stated that it will follow the policy of “production based on orders, prioritizing high efficiency” in the fourth quarter.

High leverage and demand adjustments pose constraints

While recovery signals are emerging, the pressure on balance sheets remains a pressing reality for the industry. Excluding LONGi, whose asset-liability ratio stands at 67.21%, all other major vertically integrated companies exceed 75%. Specifically, Tongwei is at 75.6%, JinkoSolar at 76%, Trina Solar at 79.7%, and JA Solar at 79.95%.

Regarding next year’s market outlook, assessments from leading industry players are neither pessimistic nor overly optimistic. During an exchange with institutional investors on October 15, Trina Solar’s management noted that the current solar industry is in the late stage of a U-shaped cycle. They projected that module product prices would trend upward in the second half of the year, driven by the arrival of the seasonal peak period and the sustained advancement of efforts to curb excessive internal competition, which would lead to a narrowing of losses in the module business.

JA Solar forecasts a slight decline in domestic market demand in China for 2027. This is attributed to constraints on grid-connection capacity at the distribution network level and daytime electricity price revenues that are suppressing the pace of commercial and industrial distributed generation. While centralized installations are expected to maintain a certain level of growth, the pace of project approvals and grid connections will both slow down, placing the overall market in a phase of gradual adjustment. Overseas markets are seen as the primary source of future growth, with North America exhibiting high certainty of expansion driven by factors such as centralized power plants, the continuation of tax credit policies, and data centers.

The description in TCL Zhonghuan’s third-quarter financial report is indicative of the broader trend. The solar industry continues to undergo bottom-level adjustments, with key product prices fluctuating slightly around cash costs. The company stated that with the phased recovery of demand, the expansion of new application scenarios, and the proactive optimization of the competitive landscape through mergers and acquisitions by major suppliers on the supply side, financial pressures and technical efficiency standards will accelerate the passive exit of low-efficiency production capacity. Consequently, the industry is expected to gradually return to healthy development.

From an investment perspective, the core message conveyed by this third-quarter report is not merely the narrowing of losses, but the ongoing repricing of the recovery sequence. The focus is no longer on scale or past market share, but on the positioning of production capacity within the technological generation. Production capacity belonging to higher technological generations and producing higher-efficiency products is expected to exit the loss-narrowing curve first, while ordinary production lines and low-efficiency capacity face simultaneous pressure from price, cash flow, and energy efficiency standards. The divergence at this watershed is likely to become even steeper around the implementation of the mandatory national standard in 2027.