(Bloomberg) -- Polysilicon producers will be the first sector along the solar equipment supply chain to emerge from the downturn plaguing the industry, according to a Chinese producer of the panel ingredient. 

A shakeout in the segment will happen faster than in other areas due to high capital costs for market reentry after activity has been suspended, said Amy Song, a vice president at GCL Technology Holdings Ltd. That will prime surviving companies for a quicker recovery, she said.

“It’s painful, in the near term, to see substantial overcapacity in the industry,” Song said in a Bloomberg TV interview on Monday. Beyond that, “every time after supply and demand balances itself, we see a better technology, better company,” she said.

That’s been a fierce price war among Chinese solar firms over the past year, forcing many to sell near or below costs and prompting some manufacturers to cut output to avoid losses. The solar grade polysilicon price dropped to $6.76 a kilogram last week, down from as high as $39 in August 2022. 

Some polysilicon manufacturers will go under in three to six months, Song said in a separate interview the same day. As supply then drops, polysilicon prices can recover to rational levels around 60 yuan ($8.28) a kilogram in six months to a year, she said.

Read More: Plunge in China’s Solar Silicon Price Spurs Further Output Cut

For other solar segments, such as wafers, cells and modules, it may take longer to emerge from the downturn, Song said. 

GCL Tech uses a polysilicon production technology that has lower costs and energy consumption, reducing its vulnerability to current conditions, although it’s managing spending “very carefully,” Song said. 

The company is also exploring opportunities outside of China, she said. GCL Tech said last year it was in advanced talks about building its first overseas plant in Saudi Arabia. However, Song didn’t provide any details on the progress of that project. 

--With assistance from Yvonne Man and David Ingles.

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