Daily Brief: China Has Cornered The Solar Panel Market, Which Corners The Rest Of Us Too

Daily Brief: China Has Cornered The Solar Panel Market, Which Corners The Rest Of Us Too

over 1 year ago3 mins

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The International Energy Agency (IEA) warned on Thursday that China’s dominance of the solar panel industry could threaten the clean energy transition.

What does this mean?

Solar energy is going to be crucial if the world wants to reach net-zero emissions by 2050, and the IEA is predicting that it’s on track to account for a third of global electricity generation by then. But a report published by the agency observes that China’s share of solar panel manufacturing – from key materials to the panels themselves – has now topped 80%, and could climb as high as 95% by 2025. That’s risky: any disruption – not least Covid lockdowns – could put major facilities out of action, push prices up, and ultimately slow down the world’s clean energy transition. We’re already seeing that happen: there’s been a 20% rise in panel prices in the past year alone, partly because of Chinese bottlenecks that have resulted in delays to deliveries across the globe.

Solar panel manufacturing

Why should I care?

The bigger picture: It’s the taking part that counts.

One of the main reasons China has such a big advantage in solar panel manufacturing is because of its much lower energy and labor costs. Most countries won’t be able to match it on that front, but the IEA thinks incentives would still spur more investment in the industry and enable companies to build out alternative supply chains. Europe has even more reason to take action: there are concerns that Russia will turn off the taps to its natural gas completely.

Russia natural gas EU

Zooming out: Fool me once…

That’s not the only thing putting climate targets at risk: a collection of airlines have been lobbying for weaker emissions policies, according to a report out this week. This, even though they’ve publicly expressed their full-throated support for governments’ net-zero ambitions. Which begs the question: if we can’t trust faceless corporations that are incentivized by the underpinnings of capitalism to prize profit above literally everything else, who can we trust?

Keep reading for our next story...

Samsung Gave Investors A Glimpse Of Its Upcoming Results

Samsung image

Electronics and chipmaking giant Samsung gave an encouraging preview of its quarterly results on Thursday.

What does this mean?

Samsung isn’t due to report its full results until the end of the month, but it likes to wet investors’ whistles ahead of the big day. And their whistles certainly needed wetting, given that dwindling demand and an oversupply have been causing trouble for the chipmaking industry. But they can put their cynicism to bed: there was still plenty of demand for Samsung’s server chips, as Big Tech hoarded them to meet booming demand for cloud computing. And since chip sales are mostly made in US dollars, the strength of the currency means those sales will have been worth more when converted back into Korean won. That might be why Samsung said it’s expecting overall revenue to have grown 21% last quarter from the same time last year – even as analysts anticipate a steep dropoff in smartphone sales.

Samsung profits

Why should I care?

For markets: A nice surprise.

Keep in mind that the chip industry isn’t a monolith: analysts have pointed out that particularly acute shortages of certain types of chip could help offset a slowdown in demand elsewhere in the market. And now that Samsung has released such a promising preview, investors might be feeling reassured that the slowdown for tech manufacturers will be less severe than they thought. That could be why they pushed up the share prices of Samsung, SK Hynix, TSMC, and United Microelectronics on Thursday, with the four Asian chipmakers gaining around $30 billion in market value.

Zooming out: Chips or death.

There are signs that the chip supply chain issues might finally have peaked, with data out this week showing that the gap between ordering and delivery fell in June. That’ll be welcome news for companies like Toyota and Apple, which have lost billions of dollars in revenue because they couldn’t get their hands on the chips they needed.

Chips wait time


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