Transformative Trends in the Photovoltaic Inverter Market: Losses and Profits Revealed

Loss of -107% and Profit of +860%: Two Numbers Reveal the Major Changes in the Solar Inverter Market

Date: May 7, 2025

As the financial reports for the first quarter of 2024 and 2025 have been released, it is evident that the solar industry is still grappling with widespread losses. However, a positive note is that most inverter companies have managed to remain profitable. According to observations from Huaxia Energy Network, the profitability of the inverter sector has generally decreased in 2024, with five out of the eight major inverter companies experiencing significant declines in profits. Notably, only GoodWe reported a loss, while the overall inverter industry remained profitable.

By the first quarter of 2025, five inverter companies reported a year-on-year profit increase of over 60%. The industry is clearly heating up, showcasing both revenue and net profit growth. The most remarkable case saw a net profit attributable to shareholders surging by eight-fold. However, the number of loss-making companies has also risen to two, with one company experiencing a 55% drop in revenue. What trends are emerging in the inverter market behind these performance changes? Can inverter companies achieve stable growth in their performance this year?

2024: A General Decline in Gross Profit Margins

In 2024, among inverter companies, only Shangneng Electric (SZ:300827), DeYe Co., Ltd. (SH:605117), and Sunrise Power (SZ:300274) reported year-on-year increases in net profit attributable to shareholders. The remaining companies saw declines in profits. Specifically, Sunrise Power’s net profit reached 11 billion yuan, a 17% increase; DeYe’s net profit was 2.952 billion yuan, up by 65%; and Shangneng Electric reported a net profit of 419 million yuan, up 46.49% year-on-year.

Among those with declining performance, Jinlang Technology (SZ:300763) and Hewei Electric (SH:603063) saw net profit declines of 11% and 12%, respectively, while HeMai Co., Ltd. (SH:688032) and Yuneng Co., Ltd. (SH:688348) reported declines of 32% and 35%. GoodWe experienced the largest drop, with a decrease of 107.25% in net profit. Overall, profit declines were a common theme in the inverter industry in 2024.

Several factors contributed to this downturn, including inventory backlogs, excess supply from concentrated production capacity, rising costs from technological upgrades, and increasing barriers in overseas markets due to the U.S. IRA Act and EU carbon tariffs. GoodWe indicated that the decline in revenue from overseas sales of high-margin inverters and batteries outweighed the increase from domestic lower-margin household solar systems, leading to a significant overall reduction in gross profit.

In 2024, nearly 40% of GoodWe’s total revenue (2.679 billion yuan) came from the photovoltaic grid-connected inverter and solar energy storage inverter sectors. Both of these segments saw substantial year-on-year declines in revenue and gross margins; specifically, the revenue from photovoltaic grid-connected inverters dropped by 22.5%, with a gross margin decrease of 9.65%, while revenue from solar energy storage inverters plummeted by 70.53% with a gross margin decrease of 6.11%.

Additionally, Jinlang Technology’s revenue from grid-connected inverters decreased by 272 million yuan, with its revenue share dropping nearly 10 percentage points to 56.96%. The gross margin for this segment also fell by nearly 3 percentage points to 18.68%. Jinlang Technology attributed the slight revenue reduction in its inverter segment to decreased customer demand. To maintain market competitiveness, the company adjusted its pricing strategy for inverter products, which subsequently impacted profits.

Despite the decline in gross margins for several companies, most remained above 18%. For instance, Jinlang Technology’s grid-connected inverter gross margin was 18.68%, and 27.48% for storage inverters; GoodWe reported a 19.78% gross margin for grid-connected inverters, while storage inverters reached an impressive 49.72%. This indicates that although 2024 saw a decline in performance, the overall profitability of inverter companies remained satisfactory. In terms of net profit attributable to shareholders, Jinlang Technology reported 691 million yuan, Hewei 441 million yuan, Shangneng 419 million yuan, HeMai 347 million yuan, Yuneng 142 million yuan, with only GoodWe reporting a loss of 61.81 million yuan.

2025: A Performance Reversal Driven by Installation Surge

As 2025 began, the inverter industry witnessed a notable acceleration in growth. In the first quarter, Sunrise Power, Jinlang Technology, Hewei Electric, Shangneng Electric, and GoodWe all reported year-on-year increases in revenue and net profit attributable to shareholders. Sunrise Power’s net profit reached 3.826 billion yuan, marking an 82.52% year-on-year increase, solidifying its position as the leading inverter company; DeYe, Jinlang Technology, Hewei Electric, and Shangneng Electric reported net profits of 706 million yuan, 195 million yuan, 105 million yuan, and 88 million yuan, respectively, with all showing year-on-year growth rates above 60%. Jinlang Technology’s profit growth was the most remarkable, soaring by 859.78% year-on-year.

However, some companies experienced declining performance or losses. For instance, Yuneng Technology’s net profit was 29 million yuan, down about 28% year-on-year. HeMai reported a loss of 10.36 million yuan, a staggering 115% decline, making it the company with the largest profit drop in the inverter sector. GoodWe continued to report a loss of 28.03 million yuan, the highest loss among inverter companies.

The notable performance reversal among inverter companies in the first quarter of 2025 was primarily driven by two key factors. The first, and most significant, was the surge in demand driven by the photovoltaic installation rush during spring, marked by the events of ‘430’ and ‘531’. In the first quarter of 2025, China’s newly installed photovoltaic capacity reached 59.71 GW, a 30.5% year-on-year increase, with March alone contributing 20.24 GW. This surge in installation demand led to a sharp increase in the demand for inverters. Since the beginning of the year, inverter prices have been on the rise, with some models experiencing price increases of 10%-20% within a few months. This price increase significantly contributed to the profit growth of inverter companies in the first quarter.

The second factor was the growth in overseas market demand for inverters. In the first quarter, the inverter industry saw a revival in exports, with markets like India, Pakistan, and the Middle East becoming important destinations. Continued growth in photovoltaic installations also propelled the development of solar inverters in overseas markets such as Europe and North America. According to the latest data from Wind, the total export value of Chinese inverters in the first quarter of 2025 reached $1.69948 billion, a year-on-year increase of 5.34%.

Stability Amidst Fluctuation: The Success of Leading Companies

It is noteworthy that companies such as Sunrise Power, DeYe, and Shangneng Electric maintained stable growth in both 2024, during the industry’s downturn, and in 2025, as it rebounded. In contrast, the losses incurred by GoodWe and HeMai, along with Yuneng’s declining revenues, highlight the increasing performance disparity among inverter companies, with leading firms exhibiting a “stronger becoming stronger” trend.

What strategies have these leading inverter companies adopted? A common characteristic among Sunrise Power, DeYe, and Shangneng Electric is their proactive approach to expanding into overseas markets. These markets not only represent larger market shares but also offer significantly higher gross margins compared to the domestic market. For instance, in 2024, DeYe, Sunrise Power, and Shangneng Electric reported average overseas market gross margins of 44.39%, 40.29%, and 32.74%, respectively, far exceeding the domestic figures of 24.41%, 20.91%, and 19.76%.

Specifically, DeYe derives 70% of its revenue from overseas markets, with export destinations including not only traditional markets like Germany but also emerging markets such as Pakistan, Brazil, Ukraine, and India. DeYe emphasizes its focus on overseas markets by deeply researching local grid characteristics and energy demands, introducing localized and market-leading new products, and establishing after-sales service or warehousing centers in Southeast Asia, Europe, and Africa to provide localized technical support.

Sunrise Power’s growth is also attributed to its overseas market strategy. Notably, in 2024, the company invested 3.16 billion yuan in R&D and launched several new products, including its first series of micro-inverters designed for rapidly developing balcony photovoltaic and household green electricity applications across Europe and globally. Furthermore, Sunrise Power expanded its global service network to over 520 outlets.

Shangneng Electric indicated that its increase in net profit was primarily due to rapid growth in its overseas solar storage business. In 2024, Shangneng Electric’s overseas revenue reached 1.164 billion yuan, an increase of approximately 474 million yuan from 2023, with overseas revenue accounting for 24.38%, up by 10 percentage points. The growth in overseas market revenue was largely attributed to the expansion of channels in North America and Europe, where North America contributed 73% of overseas revenue and Europe 17%. By enhancing localized operations and service network construction, Shangneng Electric has improved its market competitiveness. Currently, the company has established a presence in major global solar storage markets, including Europe, India, the Middle East, Africa, South America, Southeast Asia, Central Asia, and the United States. Shangneng Electric has stated that it will continue to strengthen its development in emerging markets along the Belt and Road Initiative in 2025 to mitigate risks associated with policy fluctuations in individual countries, focusing on supply chains and after-sales service network construction in the Middle East and other emerging markets.