With 90% market share of key supply chains, China’s dominance is hard to shake.

Nestled amidst durian and pine trees, the vast solar energy farm gleaming under a clear blue sky in Kulim reflects Malaysia’s promise as a green energy hub.

Walking through rows of photovoltaic panels, however, one can see a logo stamped on the more than 130 inverters: the flower-like mark of Chinese technology company Huawei.

Inverters are critical in converting direct current power generated by solar panels into alternating current electricity that can be used by households and factories. And like nearly all major components in the solar energy supply chain, their production is dominated by Chinese manufacturers.

Demand for renewable energy is growing in Southeast Asia, spurred by a boom in tech manufacturing and new data centers. A local manager at Solarvest, the nation’s largest renewable energy provider which built the solar energy farm in Kulim, says her company is keen to seize this opportunity—and that means buying more from China.

“We aim to invest more in the next couple of years,” the manager told Nikkei Asia. “Buying equipment and components from Chinese suppliers, who have mastered the supply chain and solar tech, gives us the best opportunity to generate green energy with a price that is low enough to compete against fossil fuels.”

That cost competitiveness has made China a lynchpin of many countries’ green energy roadmaps, both in Southeast Asia and beyond. Beijing has even leveraged its technological expertise in solar energy infrastructure as part of its Belt and Road Initiative to expand its influence over critical power infrastructure in nations such as Malaysia, Laos, Thailand, Pakistan, and Saudi Arabia.

This dominance has not gone down well with the US, which has accused China of unfairly subsidizing its manufacturers and flooding global markets with underpriced goods.

Washington has slapped tariffs and other trade barriers on Chinese solar products, but whether that will continue under the incoming Trump administration is an open question—the president-elect is no fan of renewable energy but a big fan of slapping tariffs on China. But for now, at least, China has economies of scale and climate urgency on its side.

Solar energy is widely seen as the most accessible and rapidly deployable source of renewable energy, attracting USD 500 billion in investment in 2024, surpassing all other types of energy generation sources, according to the International Energy Agency.

Offshore wind projects can take eight years or longer to plan and build, while solar energy plants can be deployed in less than two years. This makes solar an attractive option for companies hoping to rapidly shift to renewable energy, industry executives told Nikkei Asia.

Pressure to go adopt renewables is growing, particularly for emerging Asian economies hoping to attract investment from foreign tech giants. Companies like Apple, Google, and Microsoft have all joined the RE100 initiative, which commits to using 100% renewable energy. But many countries, including Malaysia, Thailand, and India, still rely heavily on fossil fuels, putting those hopes for investment at risk.

China was not always the solar king. In the 2000s, Japanese and Taiwanese companies such as Sharp, Motech, and New Solar Power were leading players in the photovoltaic industry, but they gradually lost their competitive edge as China’s massive economic scale and government subsidies allowed emerging players to produce solar panels more cheaply.

Today, China has a 90% market share or more in the key segments of the supply chain, from polysilicon at the upstream end to solar modules at the downstream end, according to the Industrial Technology Research Institute of Taiwan.

The country also boasts a majority of the world’s top players in solar energy, including Longi Green Energy Technology, Tongwei, GCL, Jinko Solar, and TCL Zhonghuan Renewable Energy Technology. All three of the biggest inverter makers—Huawei, Sungrow Power and Ginlong Technologies—are from China.

By 2030, China is still expected to maintain more than 80% of global manufacturing capacity for all photovoltaic manufacturing segments despite attempts by the US and India to enforce local supply requirements, according to the IEA. The agency estimates that manufacturing PV modules in the US and India currently costs two to three times more than in China. “This gap is set to remain in place for the foreseeable future.”

Rivals in the tech industry recognize China’s formidable advantages.

“It’s a global reality. The total production capacity of Chinese suppliers for one year could supply the entire world for two years. The industry continues to face significant oversupply challenges,” Doris Hsu, chair of Sino-American Silicon Products, a Hsinchu-based solar equipment maker, told Nikkei Asia. “China’s vast economic scale and technology contribute to their cost competitiveness. It’s correct to say now that without government-imposed trade barriers, Chinese suppliers offer the most affordable solutions.”

Hsu added that some governments have come to realize that solar devices and equipment are critical to national security and power infrastructure. “That means some nations would love to localize the supply chain, rather than only pick suppliers because of low cost.”

Analysts say Chinese photovoltaic equipment and devices are at least 20–30% cheaper than any of those from other countries.

“China has the capital to keep investing in the newest equipment to make the solar energy conversion to electricity more efficient, which will also be more cost-efficient,” Yang Chia-Hao, an analyst specializing in green energy with Taiwan Institute of Economic Research (TIER), told Nikkei Asia. “If you don’t get a subsidy, then the price gap between your product and Chinese competitors’ products is basically the gap between the sky and the earth.”

Foxconn, the world’s biggest contract electronics manufacturer, told Nikkei Asia that solar energy is the fastest way for the company to increase its use of renewable energy. Chinese solar panel modules are not only the most competitive in the market, the company said, they can even be as competitive as fossil fuel energy. The Taiwanese supplier, which makes iPhones and Nvidia’s artificial intelligence  servers, consumes up to 10 billion kilowatt-hours of electricity per year. It is on course to replace all of its rooftop solar panel modules globally with the latest solar technologies from China.

“We found the price of solar energy in China is almost the same as fossil fuel power in China thanks to its maturity in the photovoltaic supply chain,” Ron Horng, vice president of Foxconn’s central environment division, told Nikkei Asia.

Some say that price competitiveness will overcome geopolitical pushback for the foreseeable future.

In May, the Biden administration imposed trade barriers on imports of solar energy components and equipment from Cambodia, Malaysia, Vietnam, and Thailand to crack down on suspected circumvention of antidumping measures imposed on Chinese products.

Simon Wu, chairman of industrial chemical and gas supplier San Fu Chemical, said there was “some slowdown” in Chinese solar companies’ expansion in Vietnam after the announcement.

“However, we do expect market demand to normalize in the near future,” Wu said. “Their offerings are still the most competitive.”

Yang of TIER shared a similar view, pointing not only to loopholes in trade barriers but also to markets hungry for renewable energy and without such barriers.

“Basically, Southeast Asia is not the only market that will rely heavily on China’s photovoltaic equipment if they want to boost its solar energy adoption in a cost-effective way,” he said. “If solar energy is the future, that situation will be common all over the whole world.”

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