China’s LONGi Green Energy Technology, the world’s biggest solar power manufacturer, is set to cut almost one-third of its workforce in an effort to slash costs as the industry struggles with overcapacity and tough competition.

According to sources familiar with the matter, the company plans to cut up to 30% of its staff which, as of figures from last year, totals 80,000 employees. The sources asked to remain anonymous because plans have not yet been officially made public.

Longi has rejected claims that 30% of its workforce will be cut, despite some sources suggesting they had been briefed by senior management. Instead, the company stated that it plans to cut 5% of its total headcount – a move that would still see thousands of jobs lost.

In November, Longi began to cut thousands of jobs in a sharp reversal of the company’s rapid global expansion over the past few years. Most of the redundancies were management trainees and factory workers. Exact figures of the number of employees dismissed over the past few months is not clear.

The global solar industry is facing an “existential crisis”, according to manufacturers, as more than a decade of Chinese subsidies have caused a supply glut in Europe and other parts of the world, forcing many manufacturers into bankruptcy. Supply now far outstrips demand growth, even affecting companies that benefit from Chinese incentives.

Longi said that the industry is facing an “increasingly competitive environment”, adding that “in order to adapt to market changes and improve organizational efficiency, Longi is optimising our workforce [by cutting jobs]”.

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China’s solar sector has suffered from suspended investment plans and poor profits in recent months, with competition and alleged forced labour abuses in certain regions also affecting production. Companies in the country have been forced to sell products at or below production costs after prices for solar panels dropped to record lows last year.

As a result, Longi’s profits plunged 44% in last year’s third quarter. Company president Li Zhenguo said in October that the company “made a mistake” in not being aggressive enough in price competition with peers and was likely to miss its annual shipment targets. Shares have also fallen by around 70% from peaks seen in 2021.