The US steel industry's "Morgan moment"

In 1640 , the Sarges Iron Works, the first ironworks in the United States, was established in Massachusetts , marking the beginning of industrialization in the American colonies . Over the following two hundred years, industrial development led to the proliferation of small steel mills, marking the beginning of the American steel industry.

In 1840 , Britain used the Opium War to pry open the door to the Qing Dynasty. The United States, which had recently freed itself from British colonial rule, was gradually accelerating its industrialization process. The development of railways, agriculture, machinery, and construction led to a surge in demand for steel. At the same time, technological advances allowed the US steel industry to gradually move towards a stage of large-scale development.

During this period, Andrew Carnegie, later known as the "Steel King," founded the Carnegie-Coleman Union Steel Works in 1865. This impoverished young man from Scotland keenly understood that in the steel industry, where products were becoming increasingly homogeneous, competition depended not only on technology but also on scale, and that lower costs were the key to a company's growth and development. Once his steelmaking business was well established, Carnegie, through acquisitions and self-construction, gained control of the entire supply chain, from raw materials to transportation and production. He also invested heavily in the latest technology to continuously reduce production costs.

"Keep an eye on costs and the profits will take care of themselves." Carnegie's motto made his steel mills bigger and bigger. The significant cost advantage not only made it difficult for many small and medium-sized manufacturers to match, but also made the United States the world's largest steel producer. The United States' steel production increased from 13,000 tons in 1860 to 11.41 million tons in 1900 , with an average annual growth rate of 18% , making it the world's largest steel producer, accounting for 43% of the global market share in 1899 .

However, the biggest stumbling block to success is success itself. During the "blind rush" of rapid market demand growth, companies with cost advantages did indeed run faster. However, product homogeneity, fragmented market share, and the high exit costs of asset-heavy companies plunged the US steel industry, facing declining demand, into a brutal price war. Steel tycoons were forced to form monopoly alliances such as pools and trusts, but these alliances were often fragile due to mutual suspicion and non-compliance among members.

Disorder and chaos made people begin to worry about the future prospects of the US steel industry, which dominated the world, but the emergence of a banker changed everything.

In 1901 , financial tycoon J.P. Morgan consolidated Carnegie Steel, Federal Steel, and several other major competitors, ultimately controlling approximately 60% of steel production and establishing U.S. Steel, with a total capitalization of $ 1.4 billion. However, at the outset of U.S. Steel's formation, The Wall Street Journal expressed concerns, " disturbed by the scale of the deal ." Consider that at the time, U.S. federal budget spending was a mere $ 525 million, and the total capitalization of all U.S. manufacturing industries was a mere $ 9 billion .

However, the oligopoly allowed the US steel industry to quickly emerge from the quagmire of price wars, refocusing the industry on technological research and development. The scale of the US steel industry also reached new heights . Thanks to the widespread application of new technologies , US steel production surged fourfold in the first two decades of the 20th century , from 11.41 million tons in 1901 to 47 million tons in 1920. The prosperity of the steel industry also laid the foundation for the United States' future global dominance.

China's photovoltaic industry at a crossroads

While economists encourage competition and advocate using the "invisible hand" to regulate market supply and demand, high exit costs prevent every competing company from considering the negative externalities of their decisions, such as excessive price wars where bad money drives out good, and even the industry's global competitiveness. This is when a "visible hand" is needed. The predicament facing China's photovoltaic industry today is similar to that of the American steel industry in the late 19th century.

From the huge success of Yingli, Suntech and Skyworth that sparked a photovoltaic entrepreneurial boom more than 20 years ago, to the ups and downs that later forged a number of global photovoltaic leaders such as Longi, GCL, Tongwei and Zhonghuan, to the current collective losses faced by the entire industry, China's photovoltaic industry has also experienced an introduction period of a hundred schools of thought, a growth period of technology and scale building cost advantages, and a reshuffle period of homogeneous competition and overcapacity.

Especially over the past two years, Chinese photovoltaic companies have experienced their most severe losses in history. Taking the 2025 interim report as an example, according to Sobi Photovoltaic Network, 30 leading photovoltaic companies achieved a combined operating revenue of 303.16 billion yuan, a year-on-year decrease of 16% . Their combined net loss attributable to parent companies was 20.737 billion yuan, a year-on-year increase of 36.44% . Of these, only three companies were profitable, leaving approximately 90% of leading photovoltaic companies in the red.

It's worth noting that the scale of new global photovoltaic installations has continued to grow over the past two years. The "pie" hasn't shrunk, but the pool of players competing for it has only grown. This has led to price cuts to maintain cash flow in order to win customers. However, as the saying goes, you get what you pay for. Excessive price wars ultimately result in declining product quality and the inevitable result of inferior products driving out superior ones.

" The quality of products in the photovoltaic industry has been declining in the past two years. You think companies are losing money, selling at low prices and at a loss, making silicon wafers so thin, claiming it is a technological advancement, but it can't hold up. Making the aluminum frame thinner, the glass thinner, and the film thinner, the elasticity (of the film) is gone, how can there not be problems? " At an industry summit held in September this year, Zhang Chunguang, senior vice president of Canadian Solar, lamented.

Excessive price wars sacrifice not only product quality but also the future of the industry. According to Sobi Photovoltaic Network, R&D expenses for 30 leading photovoltaic companies decreased by 18.12% year-on-year in the first half of 2025 , a significantly higher decline than the 0.83% drop in sales expenses and the 3.96% drop in administrative expenses .