Three inverter makers capture 95% of profits as sector contracts

The inverter industry's high-growth era ended in H1 2026, when 11 listed Chinese makers saw combined profit fall even as revenue rose.

The Chinese inverter industry's high-growth era ended in the first half, with 11 listed makers posting combined net profit of RMB 10.9 billion, down 4.5 percent year on year, even as revenue rose 6.8 percent to RMB 72.8 billion.

"China's PV industry has left the record-high base of the 2025 installation rush, with new installations falling more than 60 percent and entering a deep adjustment period of rational development," GoodWe said in its interim report.

The divergence is stark. Sungrow, Deye and Sigenergy together earned RMB 104 billion, or 95.4 percent of the sector's total profit, while four of the 11 companies swung to losses. Domestic solar installations fell about 66 percent to 72.07 GW in the first half, and global additions dropped 43 percent to 177 GWac, according to data cited in company filings.

The shakeout is separating winners from losers along product lines and geography. Storage-focused players are thriving while micro-inverter and grid-tie specialists bleed, setting up a consolidation that could shrink the field to three to five integrated energy companies.

Storage Becomes the Only Growth Engine

Energy storage has become the industry's only growth segment, with global lithium-battery storage installations rising 30 percent to 140 GWh in the first half, per Sungrow's report. Jinlang Technology's storage-inverter revenue jumped 106.7 percent to RMB 16.4 billion, lifting its share of total sales from 20.9 percent to 42.2 percent and offsetting a 42 percent decline in grid-tie inverter revenue.

Sigenergy, which listed in Hong Kong in April, posted the sector's highest gross margin at 40.5 percent. Its revenue surged 261.2 percent to RMB 98.7 billion, with 94.2 percent coming from its SigenStor stackable storage systems. Australia accounted for 42.6 percent of sales, where high power prices and pre-subsidy-cut installations drove demand. Deye took the opposite path, focusing on emerging markets in Africa, Southeast Asia and Latin America, where it generated operating cash flow of RMB 41.95 billion — more than its RMB 27.2 billion net profit and the strongest in the sector.

Micro-Inverters Face Existential Pressure

The micro-inverter segment, whose largest market is US residential solar, is under the most strain. Yuanergy's revenue halved to RMB 3.0 billion in the first half, and it posted a net loss of RMB 1.32 billion, its second consecutive losing period. Its cash-to-short-term-debt ratio of 1.05 is the lowest among the 11 companies, and operating cash flow was negative RMB 2.14 billion.

The segment's cost structure is the problem. Micro-inverters track maximum power on each panel, offering safety and flexibility over string inverters, but at a structurally higher cost that price-sensitive homeowners are rejecting in a flat-price era. US demand is weak under high interest rates and tariffs, while European residential additions stalled in 2025 for the first time in a decade, according to data cited by Yuanergy.

Geopolitics Complicates Overseas Expansion

Overseas markets now drive more than 60 percent of revenue for most of the 11 companies, making trade policy a decisive variable. US Executive Order 14420, signed Aug. 26, escalates restrictions from tariffs to a direct ban on inverter imports, threatening the India-based export route that Sineng Electric built to reach US customers. Sineng's India subsidiary, which partners with Adani, ACME and Tata, generated 60.5 percent of revenue from overseas in the first half.

The reshuffle is likely to follow a predictable path, according to the interim reports: cash-poor micro-inverter makers exit first, second-tier residential storage players get acquired or eliminated, and three to five integrated energy companies remain. The second half will be the key test, as Australia's subsidy phase-out, US tariff policy and the pace of domestic large-scale installation recovery determine how quickly the field narrows.

This article is for informational purposes only and does not constitute investment advice.