Skip to Content

Once-Mighty Suntech Struggles to Survive

The Chinese solar giant is in deep trouble, but even its collapse wouldn’t be enough to stabilize a massively oversupplied market.
August 20, 2012

The world’s largest supplier of solar panels, Suntech Power, based in Wuxi, China, is teetering on the brink of insolvency. The Chinese business icon (see Solar’s Great Leap Forward”) will likely survive, but its woes show how it’s become nearly impossible for any company to be profitable selling solar panels.

Cloudy days: Employees of Suntech at a trade show in Shanghai in March.

Suntech’s founder (and solar industry pioneer) Zhengrong Shi has been replaced as CEO by former chief financial officer David King, a Chinese-American who joined the company last year.

The surprise move is meant to get Suntech’s financial house in order after four consecutive unprofitable quarters and a stock price that has fallen more than 50 percent this year. The company has a crushing debt load of over $2.2 billion and says it was a victim of a fraud involving solar projects in Europe that could further damage its balance sheet.

In many ways, Suntech is suffering from the stifling market conditions it helped create. To achieve greater scale, it borrowed heavily and rapidly expanded production to lower solar panel costs and keep pace with competitors (see “The Chinese Solar Machine”). But now, the market is flooded with panels, and the leading Chinese solar manufacturers are overextended financially.

It’s created a situation where even the most technically advanced and established companies are operating at a loss. “Even if Suntech were to vanish overnight, it wouldn’t have a profound long-term effect on the market,” says analyst Nathaniel Bullard at Bloomberg New Energy Finance. “It may spook the others, but it’s not enough to address the supply-demand dynamic.”

What will happen now to Suntech and other debt-laden Chinese manufacturers is anyone’s guess. Suntech could ratchet down expenses to remain independent, or it could combine with another large business. Some sort of debt relief from a government-owned Chinese bank is possible, too, since solar is a strategic industry in China and Suntech is a high-profile company.

But such a move could inflame tensions in the ongoing trade case against Chinese solar manufacturers accused of dumping products and receiving unfair government subsidies (see “Analysis: Chinese Solar Companies Sell Below Cost”). “There’s already a backlash and [a debt write-off] will add further scrutiny,” says Mark Bachman, an analyst at Avian Securities.

Suntech says the management shake-up will allow Shi to focus on strategy for navigating a turbulent market and to commercialize technology from its labs.  However, the management shuffle appears to be a setback for Shi, a solar industry visionary who started Suntech with $6 million in funding from the local government in Wuxi. A former research scientist in Australia, his technical credentials and the company’s focus on innovation helped set Suntech apart from other Chinese solar companies.

Shi seemed to be financially shrewd as well. Suntech went public on the New York Stock Exchange in 2005, which gave the Chinese upstart more validity in the eyes of investors and solar project financiers. But now being a public company listed in the United States comes with added disclosure burdens and pressure from skittish investors.

All the leading Chinese solar manufacturers, including Suntech, have advanced technologies to make silicon solar cells incrementally more efficient. If one of these giants does fall, those innovations would be lost unless they are purchased from competitors.

But Suntech and other solar companies’ problems are economic, not technical. With a supply of solar panels roughly double what the demand is, there’s no sign that the ongoing shake-up has run its course. “We need some of these companies to go out of business for the industry to survive and be profitable,” says Bachman.

Keep Reading

Most Popular

conceptual illustration showing various women's faces being scanned
conceptual illustration showing various women's faces being scanned

A horrifying new AI app swaps women into porn videos with a click

Deepfake researchers have long feared the day this would arrive.

A view of clouds illuminated by sunlight
A view of clouds illuminated by sunlight

We can’t afford to stop solar geoengineering research

It is the wrong time to take this strategy for combating climate change off the table.

Death and Jeff Bezos
Death and Jeff Bezos

Meet Altos Labs, Silicon Valley’s latest wild bet on living forever

Funders of a deep-pocketed new "rejuvenation" startup are said to include Jeff Bezos and Yuri Milner.

new GPT3 is a good student
new GPT3 is a good student

The new version of GPT-3 is much better behaved (and should be less toxic)

OpenAI has trained its flagship language model to follow instructions, making it spit out less unwanted text—but there's still a way to go.

Stay connected

Illustration by Rose WongIllustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at with a list of newsletters you’d like to receive.