The large-scale development of China's silicon industry began at the end of the last century and the beginning of this century. In just over a decade, the production capacity and output of various major products have jumped to the top in the world, and significant achievements have been made. However, in terms of maturity analysis, the industry is still in the early stages of development, as evidenced by the high proportion of small-scale enterprises, the lack of integration and concentration through competition, and the absence of leading enterprises with guiding and driving roles; The products are concentrated in the mid to low end market, and the industry's profitability is poor; Low investment in technology, low conversion rate of achievements, and lack of technological reserves; Lack of experience in international operations, difficulty in expanding overseas, unreasonable industrial structure, and industry development mainly rely on low factor costs.

China is a true raw material and processing base for the silicon industry, with a bulk silicon material production of about 40% of the world's production, and more than half of it is ultimately exported. The processing trade of incoming materials also plays an important role in the development of the silicon industry. For example, the import volume of polycrystalline silicon remains high, increasing to 65000 tons in 2011, and almost all of it is re exported as photovoltaic cells. However, China's high-end products such as electronic grade polycrystalline silicon and semiconductor grade silicon carbide materials are almost blank.

Market growth is gradually shifting towards a domestic demand driven model

The terminal market for silicon material products overly relies on exports, with the final export proportion of polycrystalline silicon products approaching 95%, and the proportion of polydimethylsiloxane and metallic silicon products being about 30% and 55%, respectively. During the 12th Five Year Plan period, the domestic photovoltaic market will gradually start, and the consumption of organic silicon will continue to increase, thereby driving up the proportion of domestic consumption of metallic silicon. However, the recovery of the European and American markets during the same period still needs time, and it is expected that China's silicon material market will shift towards a domestic demand driven model during the 12th Five Year Plan period.

The World Energy Outlook 2011 report released by the International Energy Agency clearly states that by 2035, renewable energy sources such as solar power, hydropower, and wind power will account for half of the newly installed capacity in the power industry, and solar power will play a leading role in the field of new energy. According to statistics, the world's electricity consumption was 14.7 trillion kWh in 2004 and is expected to reach 21.7 trillion kWh in 2015. If 1% of the world's electricity consumption were to be generated using photovoltaic technology by then, at least 1.6 million tons of polycrystalline silicon would be required. With the gradual recovery of the European and American economies, as well as the gradual introduction of new energy policies in emerging countries, the installed capacity of photovoltaics at home and abroad will continue to expand, and the demand for polycrystalline silicon will also continue to grow. It is expected that the annual growth rate of world polycrystalline silicon demand will remain at about 30% in the next five years, and the world polycrystalline silicon demand will exceed 500000 tons in 2015.

The silicon industry is a highly competitive technological industry, and its strategic value is mainly reflected in two aspects: its substitutability for other scarce materials and its support for other strategic industries. In its short development history, it has experienced multiple overall market fluctuations. After entering the 20th century, the organic silicon industry also experienced a temporary surplus, market competition deteriorated, major manufacturers' operating rates decreased, business difficulties arose, and many large enterprises went bankrupt or reorganized. The market prosperity was only restored after 2005; Four years later, affected by the global economic crisis, the silicone industry suffered another heavy blow, with major markets such as Europe, America, and Japan experiencing a significant contraction of 5% to 10%. Some giant companies were also forced to lay off employees, reduce production, and adjust their development strategies.

Analyzing the development cycles of these industries, the following points can be found:

One reason is that these changes have regularity, roughly taking 10-12 years as a cycle, which can be traced in the development history of the silicon industry. The incentives for industries to transition from peak to trough are all due to the emergence of relative surplus in the market. This surplus is sometimes caused by downstream technological progress, which reduces the consumption of raw materials, or by a decline in consumption due to macroeconomic downturn. During the trough period, the impact on the industry leads to a decrease in effective production capacity or stagflation, and then the market recovers, resulting in a relative shortage of the market and driving the industry back from the trough to the peak. It is worth noting that although policy measures related to national support for industries or economic development objectively accelerate industry recovery or development, the decisive factors affecting industry development are still market demand and technological progress.

Secondly, the rise and fall of the industry objectively promote its progress. In the trough, companies that value technological innovation and accumulation, have a sound management system, and strong risk resistance are more likely to recover. Moreover, due to the reduction of competitors after the trough, these companies are more likely to grow and better drive the industry to rise, while those that cannot adapt to market requirements will withdraw from the market stage. Therefore, after each oscillation, new situations will emerge in the development of the industry, such as improved product quality, reduced production costs, expanded production and consumption scale, and significant improvement in industry safety and environmental protection levels. For example, in 1994, the world's photovoltaic cell production was only 69MW, but in 2004 it increased to 1.2GW, a 17 fold growth in 10 years. Since 2006, photovoltaics have become the main consumer market for the polycrystalline silicon industry. By 2011, the world's photovoltaic cell production reached about 21GW, an increase of 17 times compared to 2004. Despite experiencing two major fluctuations in the industry over the past 17 years, the average annual growth rate still reached 140%. In the past 10 years, the global silicone industry has maintained an average annual growth rate of 7.8% since 2001, which is about three times the growth rate of the world economy during the same period, despite being impacted by the Asian financial crisis and the global financial crisis. During the same period, indicators such as enterprise scale, profitability, and production costs were significantly improved. Thirdly, such drastic fluctuations are often accompanied by adjustments in international division of labor and industrial transfers. The overall trend is to shift the production focus of low-end industries from developed regions with higher costs and slower growth to emerging regions. For example, in recent market downturns, there has been a large-scale shift in industries, especially in the production of bulk raw materials such as silicon metal, organosilicon, polycrystalline silicon, and white carbon black. As a result, the production focus has gradually shifted from Europe and America to countries such as Japan and South Korea, and then to emerging regions such as China, Southeast Asia, and South America. For example, in recent years, many multinational companies that have been involved in the silicon industry, such as Motorola, General Motors, Rhodia, Bayer, etc., have chosen to exit the industry. Currently, about one-third of the large silicon industry manufacturers have only grown in the past 10 years, and most of them are located in emerging regions such as China, South Korea, and South America.

The silicon industry in our country is currently facing enormous difficulties, but this also provides an opportunity for the industry's transformation and upgrading. We should take this opportunity to promote the implementation of national policies related to industry access, elimination of outdated production capacity, implementation of energy prices, and promotion of fair trade. At the same time, we should strengthen environmental protection and safety law enforcement, and further accelerate the pace of upgrading the silicon industry.

The country has provided significant support for the development of the silicon industry. While adhering to this principle, considering the characteristics and national conditions of China's silicon industry development, it is not appropriate to simply copy the industrial support policies of developed countries. For example, excessive discounts and exemptions should not be given to energy, especially electricity prices; The subsidy policy and scale for photovoltaic grid electricity prices should be formulated based on thorough research and the establishment of rigorous and feasible supervision mechanisms, rather than directly introducing large-scale subsidies; For key technologies that affect the long-term development of the industry, especially those that improve product performance, reduce costs, and enhance functionality, the government should increase support and significantly increase research investment. Proactively adapting to industrial transfer and accelerating the pace of overseas investment.

The silicon industry is developing rapidly with a long industrial chain, and it is normal for industrial transfer to occur after reaching a certain stage of development. Fully grasping and actively adapting to this trend, and accelerating the pace of overseas investment in a targeted manner, is an important way for the silicon industry to achieve leapfrog development. Proactively relocating some low-end branches of China's existing silicon industry and continuing to undertake the transfer of advanced silicon industries from abroad, while also providing abundant market opportunities for exporting engineering services and mechanical equipment to related industries abroad, is worthy of industry attention.

In short, China's silicon industry has the foundation and advantages to survive the current harsh winter and usher in new development. Nevertheless, the industry should closely monitor its development trends, respond reasonably to unexpected situations, and avoid the adverse consequences caused by various unfavorable factors occurring simultaneously. (From China Organic Silicon Forum)