Photovoltaic equipment: better than energy storage, the most certain photovoltaic subdivision track.

When studying the photovoltaic equipment industry, we will find a phenomenon: the competition pattern of each subdivision track in the industry is relatively good, and the concentration is generally relatively high. The top three in the industry basically monopolize the vast majority of market shares, among which the industry leaders occupy more than half, even 70% to 80% of the market share, which is almost an oligarchic competition mode.

This is very interesting. In a track like photovoltaic, why is the market concentration in the field of photovoltaic equipment so high?

On the one hand, the concentration of the photovoltaic industry itself is relatively high.

In 2022, the global silicon CR3 will reach 56.9 and CR5 will reach 77.2, and the concentration will continue to increase. In the silicon wafer sector, due to the large number of new entrants in recent years, the industry concentration decreased last year. Even so, CR5 will reach 69.3 in 2022. In the photovoltaic cell sector, the expansion speed of the industry giants has slowed down and the concentration has also declined in recent years due to the transformation from P-type to N-type, but CR5 is also more than half, at 50.7 per cent, and component links, also more concentrated, with CR5 at 57.2 per cent.

Why is the concentration of the photovoltaic industry so high?

The reason is that the technology content of the industry is relatively high. China has almost monopolized the production capacity of all links of photovoltaics. As a result, in the eyes of many people, the photovoltaic industry is a low-end manufacturing industry, but in fact, it is also a high-tech industry in nature. Like the "semiconductor" industry, they all belong to the semiconductor industry, but the technical requirements are lower.

The technical content is relatively high, and the volume is relatively high, which is destined to be a giant game, and the industry concentration is naturally relatively high.

On the other hand, compared with other links of photovoltaic, photovoltaic equipment is more dependent on the industrial chain. Instead of suddenly developing stronger equipment behind closed doors, it is necessary to participate with customers. The first-mover advantage will bring priority binding with customers, form a positive feedback loop, and accelerate research and development. As a result, the strong will always be strong, the leading concentration will be higher and higher, and the industry concentration will be higher and higher.

Of course, once the photovoltaic technology route changes significantly, the competitive landscape of photovoltaic equipment may also change significantly due to changes in downstream customers.

Photovoltaic equipment is worth optimistic, in addition to the industry concentration is relatively high, but also because of its long-term growth certainty is relatively strong.

02 Growth certainty is high enough

The core logic of selling equipment itself is technical iteration. In theory, the more fierce the competition in the industry, the more favorable it is to selling equipment. The photovoltaic industry is not only highly competitive, but also has frequent technical iterations. Photovoltaic equipment manufacturers can sell equipment over and over again with technical iterations. For example, before selling P-type battery equipment, now selling N-type TOPCon and heterojunction equipment, then you can also sell perovskite equipment, before selling small-size equipment, now selling large-size equipment. The higher the technical content, the higher the value content of the equipment.

With the continuous innovation of industry technology, the total amount of the whole market is also growing, and the growth space of the industry is also greater.

The transformation and upgrading pressure of key photovoltaic equipment is also less than that of other links.

Photovoltaic equipment basically take the sales-based production model, inventory pressure is relatively small. Don't underestimate this advantage, why the photovoltaic industry in the past few decades has always been the city head change king banner, is because the technology continues to iterate, the industry leader may be because of aggressive capacity expansion strategy, at the bottom of the industry cycle or major technological changes in the exhaust cash flow and bankruptcy.

Although photovoltaic equipment is also inevitably to carry out capacity construction, but to sell fixed production model has greatly reduced inventory pressure, to avoid because of aggressive capacity strategy caused by cash flow tension or even depletion, and eventually lead to bankruptcy.

This is why the photovoltaic equipment industry can not avoid the problem of technology iteration, but from the development of several equipment leader, have proved that as their respective subdivision leader, they have the ability to pass through the technical cycle.

All the above are the advantages of photovoltaic equipment compared with other links. If there is anything that can't be compared, it may be that the continuity of performance is poor.

03 PV Equipment Growth Model

The performance increment of photovoltaic equipment mainly comes from the brand-new demand brought by technology iteration and the incremental demand brought by large-scale expansion of production, which leads to not only the periodicity of the photovoltaic industry itself, but also the periodicity brought by the upstream of the industrial chain. This dual cycle attribute determines that the performance continuity of photovoltaic equipment is worse than that of other links, and correspondingly, the long-term market value growth potential is also smaller.

This is why there are more than 100 billion companies in other links, and even more than 500 billion, but the photovoltaic equipment link has surpassed the early 100 billion, and now it is all below 100 billion.

However, it can become an industrial integration enterprise by extending to other links of the industrial chain, such as taking advantage of equipment advantages to the downstream of the industrial chain, or focusing on the positioning of equipment manufacturers, only extending to other links of the industrial chain, becoming a comprehensive equipment manufacturer in the photovoltaic industry, or even expanding to other industries, becoming a comprehensive equipment platform enterprise, and then getting compensation for growth.

This is also what many photovoltaic equipment companies are doing at present. The prevailing model is to rely on an important link of the industrial chain to become bigger and stronger, and use the advantages of this link to provide downstream supporting equipment in other links, or to The downstream of the industrial chain extends.

For example, Shuangliang Energy Saving has been working hard to extend from the reduction furnace business to the silicon chip link in recent years, and is now an ambitious new player in the silicon chip link.

Another example is Mai for shares, starting from screen printing equipment, monopolizing more than 70% of the market share, to expand to the entire battery equipment, and now to laser equipment, semiconductor equipment.

The most typical is Jingsheng Electromechanical Co., Ltd., which started from the single crystal furnace business and monopolized more than 70% of the global market share. It gradually covers all-in-one grinding machine, cutting machine, slicer, automatic tile stacking production line and other links, even extends to semiconductor equipment and gradually develops towards the direction of integrated equipment platform.

In short, photovoltaic equipment is the strongest link in the photovoltaic circuit across the technical cycle, especially many companies have proved that they have the ability to cross the technical cycle, in the face of the P-type to N-type battery transfer of the initial stage of the large cycle, there is still enough room for growth. (Article transferred from Vico Network)