Where are most PV modules manufactured today?

The Global Hub of Solar Panel Production

Today, the overwhelming majority of PV modules are manufactured in China. This isn’t a recent development but the culmination of over a decade of strategic industrial policy, massive investment, and rapid technological advancement. To put it into perspective, China’s share of global manufacturing capacity for key components like polysilicon, wafers, cells, and modules now exceeds 80%. This dominance is so pronounced that the global solar supply chain is fundamentally structured around Chinese production. The country has evolved from being a significant player to becoming the undisputed epicenter of the solar manufacturing world, a position it solidified throughout the 2010s and continues to strengthen.

The Scale of Chinese Dominance in Numbers

The figures behind China’s leadership are staggering. According to the International Energy Agency (IEA), in 2022, China was responsible for more than 80% of the entire globe’s manufacturing capacity across all key stages of the solar PV supply chain. This represents a significant increase from already high levels of 60-70% just a few years prior. Let’s break down the capacity share for each critical segment of the production process:

This vertical integration is a key competitive advantage. Chinese companies control the process from mining the raw materials to producing the final, boxed product ready for installation. This control over the entire chain, from polysilicon to panel, drives down costs and ensures supply chain efficiency that is unmatched elsewhere. For instance, the wafering stage, which is highly technical and capital-intensive, is almost entirely concentrated in China, with a share approaching 97%. This means that even modules assembled in other countries often rely on Chinese-made wafers.

The Drivers Behind China’s Manufacturing Supremacy

Several interconnected factors created an environment where Chinese solar manufacturing could thrive and outpace international competition.

1. Government Policy and Subsidies: The Chinese government identified solar energy as a strategic industry over a decade ago. Through its Five-Year Plans, it provided substantial state-backed financing, tax incentives, and land-use policies that encouraged massive investment in manufacturing facilities. This was not just about supporting domestic demand; it was a deliberate strategy to create a world-leading export industry. The government fostered a competitive landscape where dozens of companies were incentivized to scale up rapidly, driving innovation and cost reduction through intense domestic competition.

2. Massive Economies of Scale: The scale of Chinese factories, or “gigafactories,” is orders of magnitude larger than most facilities in Europe or the United States. A single plant in China might have an annual production capacity of 10-20 gigawatts (GW) or more. For context, the entire annual solar installation capacity of a major European country like Germany is often in the range of 5-10 GW. This immense scale allows for unparalleled cost savings in procurement, production, and logistics. The unit cost of a PV module produced at this scale is significantly lower than one from a smaller, regional factory.

3. Advanced and Automated Supply Chain: The concentration of the supply chain within China and neighboring countries creates a powerful ecosystem. Manufacturers are located close to their suppliers of glass, aluminum frames, junction boxes, and backsheets. This reduces shipping times and costs. Furthermore, Chinese manufacturers have heavily invested in automation, with highly robotic assembly lines that improve consistency, reduce labor costs, and increase output 24/7. The level of technological sophistication in these factories is often state-of-the-art.

4. Continuous Technological Innovation: While initially known for lower-cost production, Chinese companies are now at the forefront of solar technology innovation. They are the primary drivers in the shift from standard PERC (Passivated Emitter and Rear Cell) technology to more advanced n-type technologies like TOPCon (Tunnel Oxide Passivated Contact) and HJT (Heterojunction Technology). Companies like LONGi, Jinko Solar, and Trina Solar invest billions of dollars annually in research and development, consistently pushing the boundaries of module efficiency and performance.

The Geographical Landscape Within China

Manufacturing isn’t evenly distributed across China; it’s clustered in specific industrial hubs, each with its own advantages.

• Xinjiang and Inner Mongolia: These western and northern regions are centers for energy-intensive polysilicon production. They offer abundant and cheap coal-based electricity, which is a major input cost for refining silicon from quartz. However, this has also led to significant scrutiny regarding the carbon footprint and energy provenance of solar products.
• Jiangsu and Zhejiang: These eastern coastal provinces are traditional hubs for wafer, cell, and module production. They benefit from well-established infrastructure, ports for easy export, and a skilled workforce. Many of the industry’s largest companies are headquartered here.
• Newer Hubs (Anhui, Yunnan, etc.): As the industry expands, new manufacturing bases are emerging. Yunnan, for example, offers cheaper hydroelectric power, which appeals to companies looking to produce “greener” polysilicon and wafers with a lower carbon footprint.

The Global Context and Other Manufacturing Regions

While China dominates, other regions still play important, though smaller, roles in the global supply chain.

Southeast Asia: This is the most significant non-Chinese manufacturing base. Countries like Vietnam, Malaysia, Thailand, and Cambodia became crucial export hubs for Chinese-owned companies and others seeking to circumvent tariffs imposed by the United States and, more recently, the European Union. However, much of this capacity is still reliant on Chinese inputs like wafers and cells. Recent U.S. policies, such as the Uyghur Forced Labor Prevention Act (UFLPA), have forced a re-evaluation of supply chains that transit through Southeast Asia if they are linked to Xinjiang.

India: The Indian government, through its Production Linked Incentive (PLI) scheme, is aggressively pushing to build a domestic solar manufacturing base. The goal is to reduce reliance on Chinese imports and create a self-sufficient ecosystem. While module assembly capacity is growing rapidly, the country still lacks significant scale in the upstream stages of polysilicon and wafer production.

United States and European Union: Both are actively implementing policies to onshore or “friend-shore” solar manufacturing. The U.S. Inflation Reduction Act (IRA) provides generous tax credits for domestically produced solar components. Similarly, the EU’s Net-Zero Industry Act aims to boost homegrown manufacturing. However, they are starting from a very small base. Combined, their current module manufacturing capacity is a fraction of China’s annual expansion. Building a cost-competitive, fully integrated supply chain will take many years and sustained investment.

Implications for the Global Solar Industry

China’s manufacturing dominance has profound implications. On one hand, it has been the single biggest driver in reducing the cost of solar energy by over 80% in the last decade, making it the cheapest source of new electricity generation in history. This has accelerated the global energy transition. On the other hand, this concentration creates significant supply chain risks. Geopolitical tensions, trade disputes, or logistical disruptions in one region can have immediate and severe impacts on solar deployment worldwide. The industry is now grappling with the challenge of diversifying supply chains while maintaining the low costs that have made solar power so attractive. The tension between cost, energy security, and ethical sourcing is now a central issue for policymakers and developers everywhere.