Tongwei Co., Ltd. Plans to Acquire Lihao Qingneng: Breakthroughs and Challenges in the Photovoltaic M&A Era

Author | Shengma Finance
Xin Zimo                                                                                                            Editor | Ouyang Wen

An Important Attempt at Market-Oriented Integration

On the evening of February 24, 2026, a major bomb was dropped in the photovoltaic industry. Leading silicon materials company Tongwei Co., Ltd. (600438.SH) announced that it is planning to acquire 100% equity of Qinghai Lihao Qingneng Co., Ltd. through issuing shares and cash payments. This is another major merger and acquisition event in the photovoltaic industry following TCL Zhonghuan’s proposed acquisition of Yida New Energy in January 2026, and it is also the first integration case in the polysilicon segment.

In an industry deep in overcapacity and suffering losses across the entire supply chain, is this “big boss swallowing the little boss” M&A a sign of breaking the deadlock or the start of a risky gamble?

Background of the Acquisition

From a transaction structure perspective, Tongwei’s acquisition is quite unusual. The target company, Lihao Qingneng, is chaired by Duan Yong, who previously served as a director of Tongwei and chairman of Yongxiang Co., Ltd., Tongwei’s core silicon platform. Duan Yong worked at Tongwei for nearly 7 years and is considered a key contributor to Tongwei’s silicon business. In 2021, Duan Yong left to start his own venture, leading Lihao Qingneng, which in just a few years has grown into a global unicorn and ranked among the Fortune 500.

This “return of the veteran” background sets the stage for the merger. Industry insiders note that both companies are highly similar in management culture and technical approach, with a high team fit. This “internal integration” model can effectively reduce merger risks and accelerate integration.

Looking at the equity structure, Lihao Qingneng’s shareholders include major industry players such as Chint New Energy, Aiko Solar, Jingsheng Electric, as well as investment firms like IDG Capital. During the photovoltaic industry’s winter, IPO channels are blocked, making M&A a practical exit route for capital. When Aiko Solar increased its capital in 2022, Lihao Qingneng was valued at as high as 13.849 billion yuan. How this deal is priced now will test Tongwei’s financial strength and negotiation skills.

Industry Logic

To understand this merger, it must be viewed against the backdrop of deep adjustments in the photovoltaic industry. Since Q4 2023, polysilicon prices have fallen below production costs, putting pressure on the entire supply chain. Tongwei expects a loss of 9 to 10 billion yuan in 2025, making it the “biggest loss-maker” among disclosed photovoltaic companies.

Prior to this, silicon material companies attempted to support prices through a “stockpiling” model. In December 2025, Tongwei, GCL, Lihao Qingneng, and others jointly established Beijing Guanghe Qiancheng Technology Co., Ltd. However, just a month later, the State Administration for Market Regulation summoned the companies and clearly outlined the “three no-go” red lines, challenging coordinated price support.

As Liu Hanyuan, chairman of Tongwei Group’s board, stated, the polysilicon segment is the “water tap” regulating supply and demand across the entire industry chain. When administrative coordination faces challenges, market-oriented mergers and acquisitions become the only way to clear excess capacity. This acquisition can be seen as a milestone marking the industry’s return to market-based competition.

Synergistic Value

Strategically, this merger has multiple implications.

First, consolidating the leading position. Tongwei currently has an annual high-purity silicon capacity of over 900,000 tons, ranking first globally for four consecutive years. Lihao Qingneng has over 200,000 tons of capacity already built and operational. If the acquisition succeeds, Tongwei’s silicon capacity will exceed one million tons annually, further strengthening its industry dominance.

Second, technological synergy and high-end layout. Lihao Qingneng not only has photovoltaic-grade silicon capacity but also has laid out electronic-grade polysilicon, with some indicators reaching second-tier or higher standards. This provides Tongwei with technological reserves to extend from photovoltaic-grade to semiconductor-grade materials, aligning with the “same-source technology” upgrade path.

Third, manageable financial pressure. The deal uses a “share issuance + cash payment” approach, effectively reducing cash flow pressure. As of the third quarter of 2025, Tongwei’s cash reserves were 20.547 billion yuan, with a debt ratio of 71.95%. In the context of two consecutive years of losses, equity payment is a more prudent choice.

Potential Concerns

First, integration challenges. Lihao Qingneng plans massive capacity—over 600,000 tons across Qinghai, Sichuan, and Inner Mongolia, with total investments in the hundreds of billions. However, during the industry downturn, some projects have shown no signs of starting construction. How to handle these planned capacities post-acquisition? Shut down, delay, or continue? This directly affects asset impairment and capital expenditure pressures.

Second, “post-merger issues.” In 2024, Tongwei attempted to acquire controlling interest in Runyang Group but terminated after six months of negotiations due to unresolved business terms. This previous experience shows that even after signing a letter of intent, deals can still fall through. Lihao Qingneng’s complex shareholder structure, involving dozens of limited partnerships and investment institutions, adds negotiation difficulty.

Third, financial pressure. Tongwei expects a near 10 billion yuan loss in 2025 and has also provisioned 1.5 to 2 billion yuan for long-term asset impairments. Pushing forward with a hundred-billion-level merger under performance pressure tests management’s integration ability and capital coordination.

Conclusion

Tongwei’s acquisition of Lihao Qingneng marks an important step for the photovoltaic industry moving from “involution competition” to “market-oriented consolidation.” It reflects the strategic resolve of industry leaders during cyclical lows and exposes the harsh realities of industry cleanup.

However, it must be clear: a single merger cannot change the overall supply-demand pattern of the industry. True capacity reduction requires more market-based mergers, the substantive exit of outdated capacity, and technological iteration driven by cost competition.

Zhou Ruijun, founder of Shengma Finance, believes that for Tongwei, this acquisition is just the beginning. The key is how to truly integrate Lihao Qingneng’s assets, team, and technology into its own system to achieve the “1+1>2” synergy effect, which is crucial for navigating industry cycles. This will also serve as an important reference for future mergers and integrations in the photovoltaic sector. In the winter of the industry, daring to act takes courage, but post-merger integration and management require wisdom.

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