Summary of Key Points
Due to the impact of US power equipment regulations, the stock price of Sungrow Power has declined, causing its market value to fall below 200 billion yuan. As a global leader in photovoltaic energy storage, overseas markets (especially the US) are a significant source of its revenue and profits—over 70% of its income comes from overseas, with gross profits more than twice those in the domestic market. The US market accounts for approximately 10%-20% of its total revenue. Faced with these policy risks, Sungrow Power has decided not to build factories in the US (out of concerns about high costs, unfair competition, and consumer skepticism). Instead, it is taking three approaches to mitigate the impact: increasing investment in technological innovation, expanding into non-US overseas markets, and deepening its presence in existing channels. It is also betting on the emerging field of power supply for computing capabilities, although this new business is still in its initial stages and carries significant uncertainties.
I. US Policies as a Warning: Why Did Sungrow Power’s Market Value Drop?
Recently, the US introduced regulations on power equipment, which directly affected Sungrow Power’s stock price. As of September 1st, the company’s market value had dropped from 200 billion yuan to around 180 billion yuan. Why is the impact of US policies so significant? The US is a crucial overseas market for Sungrow Power; in 2025, the company identified the US as one of its key markets for in-depth development. Moreover, the gross profit from overseas operations is much higher than that from domestic operations (over 40% compared to less than 20% domestically). Although the US market accounts for only 10%-20% of total revenue, it generates a substantial portion of the company’s profits. Therefore, when policies tightened, investors worried that Sungrow Power’s profits would be affected, leading to a decline in the stock price.
II. Overseas Markets as a Critical Revenue Source
Sungrow Power’s main revenue comes from photovoltaic inverters and energy storage systems (accounting for 90%), with overseas revenue accounting for 73.4% in the first half of 2026. Importantly, the profitability of overseas operations is much higher: while selling for 1 yuan in the domestic market may result in a profit of less than 0.2 yuan, overseas sales can generate a profit of over 0.4 yuan. The size of the US market is substantial; based on data from its subsidiaries, the US subsidiary’s revenue in 2025 was 17.2 billion yuan, accounting for 31.94% of total overseas revenue. Even though the US market’s share is not particularly high, its high gross profit contribution makes it a significant contributor to the company’s overall profits.
III. Why Not Build Factories in the US?
Many people ask why Sungrow Power does not build factories in the US to avoid policy risks. The company’s reasons are straightforward:
1. Unfair Competition: The current US policy environment is unfavorable to Chinese companies, and even if factories were built, consumers might still lack trust in the products.
2. Cost Disadvantages: Labor and land costs in the US are higher, making locally produced products less competitive.
3. High Asset Burden: Building factories would require significant investment, shifting the company from a “light-asset” to a “heavy-asset” model, which carries greater risks.
Therefore, Sungrow Power has chosen to “moderately reduce its US business operations” rather than face these challenges head-on.
IV. Three Approaches to Mitigate Risks: Exploring New Markets, Enhancing Technology, and Entering New Business Areas
Sungrow Power has identified three strategies to address these risks:
1. Expanding into Non-US Overseas Markets: Focusing on developing markets in Europe, Asia-Pacific, and the Middle East. For example, it has built a factory in Poland (to start production in the first half of 2027), and its factory in Thailand is already in operation. Although the Middle East market saw a significant order last year, revenue decreased by 91% this year, so the company still relies on orders from Europe and Asia-Pacific. However, there are policy risks in Europe (some projects do not allow the use of Chinese inverters), but Sungrow Power believes these impacts are limited and not a major concern in the short term.
2. Investing in Technological Innovation: Although the research and development growth rate slowed from double digits to 2.85% in the first half of 2026, the company continues to focus on improving product efficiency and reducing costs through innovation.
3. Entering the New Field of Power Supply for Computing Capabilities: Sungrow Power has developed highly efficient solid-state transformers (with 98.5% efficiency) and is collaborating with Alibaba Cloud and Dongguang Power to supply energy to large data centers. The company expects this business to experience explosive growth, but since the industry is still in its early stages, it is uncertain whether it will be profitable on a large scale.
V. Can the New Business Area Save the Day?
The new field of power supply for computing capabilities holds great potential, but it needs further evaluation:
- Industry Development: The global computing power supply market is still in its commercialization phase; it is uncertain whether customers will make large-scale purchases.
- Fierce Competition: Other companies are also entering this market, so it is uncertain whether Sungrow Power can secure enough orders.
- Profitability Uncertainty: Currently, only small-scale deliveries are being made; it is unclear whether costs can be reduced and profits can be achieved with mass production.
Therefore, while this new business area represents a promising opportunity, it still requires time to prove its effectiveness and cannot immediately fill the gap left by the US market.
In summary, Sungrow Power is facing pressure from the US market but is taking steps to diversify its markets and explore new businesses to mitigate risks. However, these efforts will take time to yield results, and both investors and the company need to be patient.