Korea's solar industry faces challenges as Chinese companies sell it at cheaper prices

By: Asia Business Outlook Team | Monday, 20 March 2023

Due to aggressive price competition from China, South Korean solar energy material companies are experiencing a decline in both employment and market size at home.

According to data released on Sunday by the Korea Energy Agency, the number of employees in the Korean photovoltaic manufacturing industry will fall to 6,654 in 2021 from 8,639 in 2015. Domestic PV manufacturing market size shrank to 2.17 trillion won ($1.66 billion) in the same period from 2.29 trillion won.

The decline was primarily caused by Chinese companies' low-cost strategy. Due to an unfavourable cost structure, Korea's two leading solar power-related companies, Hanwha Solutions Corp. and OCI Co., ceased domestic production of polysilicon, a key material for solar cells, in 2020. SKC Ltd. shut down its ethylene-vinyl acetate sheet business, which was used in solar modules, in April of the same year.

Woongjin Energy Co., Korea's sole manufacturer of solar ingots and wafers, declared bankruptcy in July of last year. In June, LG Electronics Inc. also announced the closure of its solar module business. Chinese solar cells are gaining market share in the Korean market. Chinese solar cells accounted for 52% of the Korean market in 2017 and 59% in 2018.

China's module occupancy increased from 27 percent to 32 percent. However, because Chinese solar cells are classified as domestic if they are used to manufacture solar modules in Korea, the actual proportion of Chinese products in the domestic market is even higher.

“Even if we want to build a mother factory with cutting-edge facilities in Korea and lead R&D activities, we are hesitant to invest because there are no subsidies unlike in the U.S,” said a Korean PV industry official.

“To restore the domestic solar industry ecosystem, it is necessary to consider subsidizing the establishment of solar manufacturing facilities in Korea,” said Jung Woo-sik, vice president of Korea Photovoltaic Industry Association.