Chinese solar giant Tongwei has announced plans to acquire 100% of polysilicon producer Qinghai Lihao through a combination of share issuance and cash, alongside a proposed supporting fundraise. The move was disclosed in a trading suspension notice dated Feb. 25.
Tongwei said the transaction remains at a preliminary stage. The company has signed an intention agreement with the proposed sellers — Duan Yong and two limited partnerships, Hainan Zhuoyue Enterprise Management Partnership and Hainan Haoyue Enterprise Management Partnership. Final parties and detailed terms will be revealed in a subsequent transaction plan or formal report.
The company clarified that the deal is not expected to result in a change of control, does not constitute an affiliated transaction, and, based on initial assessment, is unlikely to qualify as a major asset restructuring.
Trading Suspension Announced
To prevent abnormal share price fluctuations amid uncertainties surrounding the transaction, Tongwei suspended trading of its A-shares and related convertible bonds from the market open on Feb. 25. The suspension is expected to last no more than 10 trading days.
Qinghai Lihao’s Growing Footprint
Qinghai Lihao is a privately held joint-stock company established in 2021 in Xining, Qinghai province. Its business scope covers electronic materials manufacturing, along with related trading activities.
Industry reports describe Lihao as a rapidly expanding polysilicon producer leveraging Qinghai’s abundant renewable energy resources. Public disclosures indicate that its first-phase 50,000 metric ton (MT) polysilicon project reached commissioning in 2022. While longer-term capacity ambitions are believed to be significantly higher, Tongwei’s suspension notice did not disclose specific capacity figures or a proposed purchase price.
Shift Toward Market-Driven Consolidation
The proposed acquisition comes shortly after China’s antitrust regulator halted an industry-led initiative aimed at curbing polysilicon capacity and coordinating pricing. That plan involved six major producers — Tongwei, GCL, Daqo, Xinte, East Hope, and Asia Silicon — and envisioned raising approximately CNY 50 billion ($7 billion) to acquire and idle roughly one-third of the country’s polysilicon production capacity.
Collectively, the six companies account for nearly 2.5 million MT of capacity, while the remainder of the industry represents around 700,000 MT.
Against this backdrop, Tongwei’s move to acquire Lihao signals a pivot toward consolidation through mergers and acquisitions rather than coordinated capacity management. If completed, the deal would consolidate a sizable portfolio of relatively new Qinghai-based assets under a larger incumbent, potentially accelerating capacity concentration within fewer balance sheets.
However, the ultimate impact on effective supply will depend on how the combined entity manages utilization rates, product mix, and future expansion plans.
Tongwei noted that key details — including valuation, definitive agreements, audit and appraisal outcomes, and regulatory approvals — remain pending. The company also cautioned investors regarding potential execution risks as the transaction progresses.
