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The global polysilicon market size by volume was valued at 585.6 tons in 2021 and is projected to grow from 664.1 tons in 2022 to 1,718.0 tons by 2029, exhibiting a CAGR of 14.5% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with polysilicon experiencing higher-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a growth of 5.9% in 2020 as compared to 2019.
Polysilicon or polycrystalline silicon is produced from metallurgical grade silicon. It is an ultra-high pure form of silicon and consists of a number of smaller crystals. This material serves as a crucial material component in the manufacturing of solar cells along with other electronic devices. It is used in the electronics industry and typically contains impurities less than one part per billion. On the other hand, material grades created for solar photovoltaics are comparatively less pure.
Supply Chain Disruptions due to Lockdown Restrictions Hampered Market Growth
China dominated the global market in 2020 and was the epicenter of the COVID-19 outbreak. The regional lockdown restrictions imposed during the pandemic disrupted supply chains, adversely affecting numerous end-use industries. The global supply chain disruption caused by the pandemic was further intensified by trade restrictions, raw material and workforce shortages, freight container shortages, and logistical challenges. The shortage of raw material supplies had a significant impact on the semiconductor manufacturing capacity, resulting in a shortage of silicon chips. Due to a shortage of silicon chips, major automakers, such as GM and Ford, temporarily shut down their factories. Another major consumer is the solar power industry, which faced major challenges due to raw material shortage. The solar power market has shown a rising trend during the pandemic owing to the rising adoption of solar power. However, polysilicon producers were unable to keep up with rising demand, resulting in a significant gap between demand and supply. As a result, prices for this material rose sharply in 2020 for the first time after decreasing constantly in the past few decades. The significant price fluctuation has hampered the development of numerous major solar projects throughout the world, causing project delays and even slower adoption of solar power. In order to keep up with the rising demand, various governments across the globe have taken initiatives to support domestic production. Several major key players in the field are expanding their manufacturing facilities due to the rising demand.
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Growing Digitalization in Emerging Economies to Drive Market Growth
Digitalization presents enormous growth opportunities for emerging economies to boost growth rate and be part of the global economy. Digitalization brings people closer, enables better use of resources, and speeds up development and economic growth. To tap the potential advantages of digitalization, governments and international organizations are encouraging and heavily investing in digitalization. For instance, the Government of India has been running a Digital India program since 2015 with a vision of transforming India into a digitally empowered society and knowledge economy. Digitalization helps with services available to people electronically by improving online infrastructure and increasing internet connectivity or making the country digitally empowered in the field of technology. This has resulted in increased response to digitalization, causing increased demand for consumer electronics, which also caused an increase in demand for electricity. Therefore, rising digitalization provides lucrative opportunities for the market by pushing the demand for electronics grade products.
Rising Demand from Solar Photovoltaics to Drive Market Growth
Climate change is one of the most serious challenges the world is experiencing today, impacting every region on the planet. Extreme weather events such as heat waves, droughts, cyclones, and heavy rains have grown increasingly common in recent years, disrupting businesses and impacting people's lives. According to a 2021 report issued by the United Nations' Intergovernmental Panel on Climate Change (IPCC), the average global temperature has already risen by 1.1 degrees’ Celsius relative to pre-industrial temperatures in the nineteenth century. Scientists estimate that the average global temperature could increase by 1.5 degrees Celsius in the next 20 years, exceeding the 1.5-degree Celsius danger limit set in the Paris Agreement. One of the key actions that can help to avoid the catastrophic impacts of global warming is to reduce greenhouse gas emissions immediately by reducing fossil fuel consumption and transitioning to alternative renewable energy sources such as solar energy.
Leading economies, such as the U.S., China, and the European Union, have already stated their intention to achieve net zero emissions in the subsequent years, with solar power farms playing a key role in their strategy. A significant share of the polycrystalline silicon produced worldwide is consumed by the solar photovoltaic industry to manufacture solar cells and panels. Despite the global economic slowdown caused by the COVID-19 pandemic, demand for solar photovoltaic panels has grown considerably in both the residential and commercial sectors. Several countries around the globe have reported substantial increase in solar power capacities and this trend is likely to continue during the forecast period. For example, China acquired 48.2 Gigawatts of additional solar generating capacity in 2020 as part of a strategy to reduce its dependence on fossil fuels and cut carbon emissions. Rising environmental concerns are anticipated to accelerate adoption of renewable energy sources such as solar power during the forecast period. The solar photovoltaic industry is anticipated to expand significantly during the forecast period owing to the rising adoption of renewable energy sources, which, in turn, will benefit and drive the polysilicon market growth.
Use of Capital Intensive Manufacturing Process to Restrict Market Growth
The establishment of a manufacturing facility is a capital-intensive enterprise that also requires modern technology and a highly skilled workforce. China presently dominates the market, accounting for around 80% of global production. The pandemic-caused supply chain disruptions resulted in a shortage of silicon chips, impacting all semiconductor electronic-related industries, including the automobile and consumer electronics industries, which rely on semiconductor components. After witnessing the vulnerabilities in supply chains, several countries have recognized the importance of domestic production and its geopolitical implications on their semiconductor-dependent industries.
Countries across the globe have been taking initiatives and investing in developing domestic production facilities to protect their semiconductor-dependent sectors. However, owing to the high capital required to set up manufacturing facilities, investment in these types of ventures is limited to players with deep pockets. The capital-intensive nature of the manufacturing process has been a major bottleneck and is anticipated to restrict market growth. Furthermore, competition from China's low-cost products adds uncertainty to the business, limiting investments and development of manufacturing in other regions.
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Rising Adoption of Renewable Energy to Create New Market Opportunities
Based on application, the market is segmented as solar photovoltaics and electronics. The solar photovoltaics segment dominated the market due to the wide use of material in the manufacture of solar photovoltaic panels and semiconductors. The growth of this segment is primarily attributed to the growing demand for solar PV systems installation across the world, which, in turn, surges the demand. The solar photovoltaic sector is one of the fastest growing industries worldwide. According to the International Energy Agency (IEA), the industry accounts for almost two-thirds of net energy capacity across the world.
In addition, a solar photovoltaic plant used to power mini grids is a brilliant way to produce electricity available to people who do not have access to power transmission lines, mainly in emerging countries with excellent solar energy resources. Increasing growth of the market due to significant demand from specific end-use sectors, including growth in solar cell installations, increasing investment and incentives for solar photovoltaics installations, and growth in semiconductor sales will drive the development of the market.
Asia Pacific Polysilicon Market Size, 2021 (Tons)
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Asia Pacific accounted for a major market share of 457.4 tons in 2021. China dominated the global market in terms of manufacturing and export due to its well-established silicon sector and the availability of low-cost labor and coal. In 2020, China acquired 48.2 Gigawatts of additional solar power capacity, as part of a strategy to reduce reliance on fossil fuels and lower its carbon emissions. Polycrystalline silicon manufacturers, most of them based in China, are struggling to meet the increased demand from the photovoltaic industry. Prices for the material have risen by 40% due to a supply shortage and are expected to remain high for the next few years, although new manufacturing facilities are under development, it will take time to catch up with rising demand. High costs have impacted the solar industry, forcing manufacturers to reduce their photovoltaic module manufacturing capacity. Other countries in the region have begun to invest in domestic production facilities to safeguard their expanding photovoltaic and electronic sectors against potential shortages. For example, the Indian public sector companies such as NTPC and BHEL have announced intentions to construct a polycrystalline silicon production facility with a capacity of roughly 10 Gigawatts to reduce their dependence on China. The solar photovoltaic industry is anticipated to expand as several countries in the region are likely to adopt renewable sources such as solar energy to meet their energy needs. Polycrystalline silicon is a key component in the manufacture of solar photovoltaic modules and is expected to witness a surge in demand, driving the market expansion in the South East Asia Pacific region.
The North America polysilicon market share is anticipated to expand attributed to the rising demand from the solar photovoltaic industry. Residential and business solar installations in the U.S. have increased significantly in recent years as a result of rising affordability, government incentives, and commitment to reduce carbon emissions. According to a study published by the Solar Energy Industries Association and Wood Mackenzie, despite the economic slowdown caused by COVID-19, the U.S. solar industry installed a record 19.2 Gigawatts of new capacity in 2020, a 43% increase over the previous year. The study also projects that solar installations will quadruple compared to current levels by 2030. The solar power industry in the region is anticipated to expand during the forecast period, which will benefit and drive the expansion of the market.
The European Commission has established legally binding targets to reduce net carbon emissions by 55% by 2030 compared to 1990 levels and to eliminate them entirely by 2050. One of the European Union's initiatives to achieve these goals is to expand the use of renewable energy, with the aim of increasing the percentage of renewable energy to 40% of total consumption by 2030. According to a report published by SolarPower Europe, the region's solar industry expanded by 11% in 2020, providing an extra 18.7 Gigawatts of energy generation capacity through solar photovoltaic modules. Recent volatility in polycrystalline silicon prices and allegations of forced labor and human rights violations in Chinese production facilities are anticipated to cause a short-term delay in solar installation projects in Europe. However, the European Union is expected to take essential actions in the long run such as developing domestic production facilities to strengthen its solar power industry. Rising demand from the region's solar industry and the EU's strong commitment to the transition to renewable energy are anticipated to drive market expansion.
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Government initiatives to encourage green energy and the high availability of land are likely to boost the growth of utility-scale solar farms in countries such as Brazil and Mexico during the forecast period, driving market expansion. Many oil-producing countries, including Saudi Arabia, Iran, Iraq, and Kuwait, have previously stated their ambition to diversify their energy portfolio by incorporating renewable energy sources such as solar power. Several massive solar projects in the pipeline, all of which are likely to benefit and expand the market in the Middle East & Africa.
Strategic Planning Adopted by Companies to Strengthen their Market Share
A few major polysilicon players primarily dominate the market. The existing players have developed proprietary products and they maintain a competitive edge over other players owing to their unique product offerings. Furthermore, the companies are continuously conducting R&D activities to develop better solutions to match the changing needs of the electronic industry.
The major polysilicon companies operating in this market include Wacker Chemie AG, Xinte Energy Co., Ltd., OCI Company Limited, Hemlock Semiconductor Corporation, and REC Silicon ASA, among other players. Plant expansions and development of new manufacturing facilities characterize the global market. Several other companies, such as Daqo New Energy Corp., GCL Technology Holdings Co., Ltd., Mitsubishi Materials Corporation, Qatar Solar Technologies, Tokuyama Corporation, are among other active participants in the market.
An Infographic Representation of Polysilicon Market
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The research report provides qualitative and quantitative insights on the market share, size, growth rate, and trend analysis by different segments. Along with this, the research report provides an elaborative analysis of the market dynamics and competitive landscape. Various key insights presented in this market analysis report are PORTER’s five forces, recent industry developments, regulatory scenarios, and key polysilicon industry trends. The report also highlights the competitive landscape between key polysilicon players operating in this market.
By Application and Region
Fortune Business Insights says that the global market size was 585.6 tons in 2021 and is projected to reach 1,718.0 tons by 2029.
In 2021, the Asia Pacific market size stood at 457.4 tons.
Registering a CAGR of 14.5%, the market will exhibit steady growth during the forecast period (2022-2029).
The solar photovoltaics segment is expected to lead this market during the forecast period.
Rising demand from the solar photovoltaic industry will drive the market growth.
Wacker Chemie AG, Xinte Energy Co., Ltd., OCI Company Limited, Hemlock Semiconductor Corporation, and REC Silicon ASA are a few of the major players in the global market.
Asia Pacific dominated the market in terms of share in 2021.
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