Chinese solar manufacturer Lingda Group Co. has terminated plans to build a new 9.15 billion yuan ($1.3 billion) cell production plant as severe overcapacity threatens a wave of bankruptcies and consolidations in the industry.

The announcement Tuesday comes just days after the company said it had suspended production at its existing factory after prices of solar cells “fell sharply,” according to a separate statement last week. The “temporary production suspension will help avoid losses” caused by low prices, the company said.

China’s solar companies have expanded capacity much faster than demand has grown in recent years, driving record low prices that have pinched profits and forced some firms to operate at a loss. That has resulted in massive job cuts, production cuts and canceled investment plans.

Lingda relies on solar cell manufacturing for more than 90% of its revenue and had as much as 3.5 gigawatts of production capacity at the end of 2022, according to its annual report. The company has been losing millions of yuan every year since 2020, and warned in 2023 preliminary results that it lost between 19 to 38 million yuan last year.

Written by: Bloomberg News — With assistance from Luz Ding and John Liu @Bloomberg

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