Shanghai-listed polysilicon producer Tongwei has announced plans to purchase 100% of Qinghai Lihao through a combination of share issuance and cash consideration, signaling a further shift toward mergers and acquisitions as consolidation gathers pace in China’s polysilicon sector.
According to a trading suspension notice, in this polysilicon deal Tongwei intends to complete the acquisition via a share-and-cash transaction and will also pursue a supporting fundraise. The company emphasized that discussions are still at an early stage.
Tongwei confirmed it has entered into an intention agreement with the proposed sellers – Duan Yong and two limited partnerships, Hainan Zhuoyue Enterprise Management Partnership and Hainan Haoyue Enterprise Management Partnership. It noted that the final parties involved and the specific transaction terms will be disclosed later in a formal transaction plan or report. The company further stated that the proposed deal is not expected to result in a change of control, does not constitute an affiliated transaction and, based on its preliminary review, is not expected to qualify as a major asset restructuring.
In order to prevent abnormal share price fluctuations while uncertainties remain, Tongwei suspended trading of its A-shares and related convertible bonds from the opening of the market on Feb. 25. The suspension period is expected to last no longer than 10 trading days.
Qinghai Lihao, a privately held joint-stock company established in 2021, is registered in Xining, Qinghai province. Its stated business scope covers electronic materials as well as related manufacturing and trading activities.
Industry accounts characterize Lihao as a fast-expanding polysilicon producer that capitalizes on Qinghai’s renewable power resources. Public reports regarding its development indicate that its first-phase 50,000 metric ton polysilicon project entered commissioning in 2022. Longer-term capacity ambitions have been described as significantly higher, though Tongwei’s suspension notice did not provide specific capacity figures or disclose a purchase price.
The polysilicon deal announcement comes after China’s antitrust regulator in early January halted an industry-led initiative aimed at curbing polysilicon capacity and coordinating pricing. That proposal involved six leading producers – Tongwei, GCL, Daqo, Xinte, East Hope and Asia Silicon – and outlined plans to raise approximately CNY 50 billion ($7 billion) to acquire and idle about one-third of the nation’s polysilicon production capacity. Collectively, the six companies represent nearly 2.5 million metric tons of capacity, with the remainder of the industry accounting for roughly 700,000 metric tons.
Set against this context, Tongwei’s proposed acquisition of Lihao reflects a consolidation approach driven by market-based mergers and acquisitions rather than coordinated capacity management. Should the transaction proceed, it would bring a sizeable portfolio of relatively new Qinghai polysilicon assets under the control of a larger established producer, potentially advancing capacity concentration among a smaller number of balance sheets. The ultimate impact on effective supply will depend on how the combined entity determines utilization rates, product mix and future expansion plans.
Tongwei added that further details, including valuation, definitive agreements, audit and appraisal outcomes and regulatory approvals, remain outstanding, and it cautioned investors regarding execution risks.