Solar Encapsulant Films

What it is

Encapsulant film (光伏胶膜) bonds the cells to the front glass and the back of a solar module and seals them in. EVA (ethylene vinyl acetate) is the most common material, and the layers are heated to about 150°C to bond them (PVEducation, Honsberg and Bowden). The main alternative is POE, a polyolefin elastomer; makers sell transparent and white EVA films, POE films and co-extruded EPE films that combine the two (First Applied 2026 interim report, p. 5).

HIUV notes that modules must last more than 25 years, so although film is a small part of module cost, customers are strict about its quality: films go through customer tests, third-party testing and long-term reliability checks, and some project tenders specify the film supplier (HIUV 2026 interim report, p. 12).

Why it matters for the chain

New cell designs need new films. First Applied sells a light-converting film for heterojunction cells, a "skin" film for back-contact modules without busbars, and butyl sealant, which it says is used increasingly in back-contact, heterojunction and reduced-silver TOPCon modules to keep moisture out (First Applied pp. 14, 15). Resin is the main input: EVA and POE pellets are more than 70% of First Applied's production cost (p. 24).

Where China stands

HIUV says Chinese film makers hold an important place in global supply (HIUV p. 12). The stage is concentrated:

• First Applied (福斯特, 603806.SH) says it has about half the world market, more than the next three makers combined (pp. 15, 16). It sold 1,220.2 million square metres of film in the first half of 2026, down 11.97%, and has plants in Thailand and Vietnam (pp. 14, 15). It names Jinko, LONGi and Trina among its customers (p. 16).
• HIUV (海优新材, 688680.SH) sold ¥559m of film in the same half, less than a tenth of First Applied's ¥6.13bn (HIUV p. 159; First Applied p. 14).

Economics: the supplier that makes money

• First Applied's film earned a gross margin of about 17.0% (our calculation from p. 140). Its net profit rose 69.89% to ¥842m, and operating cash flow was ¥1.28bn (p. 6). Cost of sales fell 17.10%, faster than revenue, mainly because of lower volumes and cheaper resin, the company says (p. 17).
• Its overseas sales, across all products, earned about 23.0% against about 13.7% in China (our calculations from p. 140).
• HIUV's film earned about 6.3% (our calculation from HIUV p. 159), and it lost ¥47.6m (p. 7). Its main-business gross margin rose to about 6.7% from about -1.7% a year earlier, so cheaper inputs helped the whole stage (our calculation from p. 159).

The module makers that buy the film earned between about -2% and 3% on their solar products in the same half (JA Solar 2026 interim report, p. 16; our calculation from Jinko's 2026 interim report, p. 165).

What to watch

• Resin prices. First Applied warns that oil prices and output cuts at foreign chemical makers can raise resin costs faster than it can pass them on (First Applied p. 24).
• Diversification. First Applied is growing photosensitive dry film for circuit boards, including AI server boards, and aluminium-plastic film for batteries (p. 15); HIUV's dimming film for car glass roofs was chosen for five more car models (HIUV p. 15).
• Trade. First Applied cites anti-dumping and countervailing cases in Europe and the US against Chinese solar and electronic materials (First Applied p. 24).

Our view: encapsulant film is the clearest case on this map of a concentrated supplier keeping its margin while its customers lose money. First Applied, with about half the market, earned nearly three times HIUV's film margin.