Drinda turns out the lights on $280 million Oman solar project

The solar cell maker cited the Middle East war, tariff uncertainties and new Chinese technology export restrictions for its decision

Key Takeaways:

• Drinda New Energy has scrapped its plan for a $280 million 5 GW solar cell factory in the Middle Eastern nation of Oman
• The company is the latest from China’s solar sector to abandon an overseas manufacturing project

By Doug Young

A perfect storm of factors has conspired to kill Hainan Drinda New Energy Technology Co. Ltd.’s (2865.HK; 002865.SZ) plans for a $280 million plant making solar cells in the Middle Eastern nation of Oman. That decision, announced by the company on Thursday, marks the latest setback for Chinese solar companies going abroad to be closer to their customers and avoid trade barriers aimed at their products manufactured in China.

In this instance, Drinda’s decision really does seem to be the result of several major factors rather than one overriding reason. Oman, where the new facility was set to be located, is near the epicenter of the recent conflict in the Middle East, though it’s conveniently located on the outside of the Strait of Hormuz that has become a key shipping bottleneck.

There’s also the issue of tariff uncertainties, as both the U.S. and Europe increasingly target solar panels and materials made anywhere in the world by Chinese companies, rather than just products made in China. Western companies have cited unfair state support in their decision to impose punitive tariffs on Chinese products in the past, prompting many Chinese companies to set up offshore factories to avoid such penalties.

Most recently, China has also stepped in with its own increasingly protective policies designed to keep Chinese companies from moving their most cutting-edge technologies abroad. In explaining its decision to scrap the Oman project, Drinda pointed out that China’s Ministry of Commerce last month proposed revisions to its “Catalogue of Technologies Prohibited and Restricted from Export” to include certain solar-related technologies.

The company had already hinted that the Oman project was running into trouble in its midyear report released in August.

“Affected by the complex and volatile international trade environment and tariff policies, as well as increasing geopolitical uncertainty in the Middle East, the implementation of the company’s originally planned … cell production base project in Oman was affected,” it said. The company … will dynamically optimize the project plan based on actual conditions and prudently advance its implementation.”

That prudence led Drinda’s board to formally scrap the plan in a vote at a meeting on Thursday. The plant was originally planned to have 5 GW of annual capacity, which would have complemented the company’s existing 40 GW at two domestic facilities, one in Jiangsu province and the other in Anhui.

The Oman plant was slated to become the biggest recipient of funds raised at the time of Drinda’s Hong Kong IPO in May last year, receiving about three-quarters of the HK$1.3 billion in net proceeds. Most of the HK$970 million ($124 million) budgeted for the project has yet to be utilized, and will now be redeployed to other uses, according to Drinda’s latest announcement.

The company will use HK$578 million of that instead for R&D of PV cell products, technological upgrades and revamping of production lines. Another HK$289 million will go to strategic procurement of raw materials, the company said, saying that will allow it to stockpile extra supplies of silver paste and silicon wafer, whose prices have been volatile lately. The remaining HK$96 million will go to replenish the company’s working capital.

Stabilizing industry

Investors were mixed on the project’s cancelation. The company’s Hong Kong stock fell 6.3% in Friday morning trade after the announcement. But it rose 8.1% the previous day, most likely on investor relief in response to market rumors that a project facing so many headwinds was being abandoned.

The reality is that Drinda already had plenty to worry about from one of the solar sector’s worst-ever downturns, and didn’t really need yet another headache from the Oman project. The industry downturn is the direct result of overbuilding by companies throughout the photovoltaic chain, resulting in massive overcapacity and crashing prices dating back to 2023.

Drinda’s major performance metrics are representative of the overall group. Its revenue has fallen sharply over the last two years, and at 7.63 billion yuan ($1.14 billion) last year, was less than half of the 18.7 billion yuan at its peak in 2023. The company fell into the red in 2024, and its loss widened from 591 million yuan that year to 1.42 billion yuan in 2025. It produced 28.9 GW worth of solar cells last year, meaning nearly 30% of its capacity was sitting idle due to industry oversupply.

But the situation has finally started to stabilize as the government has stepped in and guided companies to retire older capacity and pressured some smaller players to leave the business. As that happened, Drinda reported its revenue fell by 14% year-on-year in the first half of 2026 to 3.15 billion yuan, improving from a 23% drop for all of 2025. Its loss also stabilized and even narrowed slightly to 261 million yuan from 264 million yuan year-on-year.

The latest trends continue to show improvement, with solar panel maker JinkoSolar (JKS.US; 688223.SH) and polysilicon maker Daqo (DQ.US; 688303.SH) both reporting that prices for their products rose in the third quarter from the second. As the situation improves, analysts see Drinda returning to revenue growth in the second half of this year, and all six who follow the company’s Shenzhen-listed stock rate the company a “buy” or “strong buy.”

Drinda isn’t the only company to cancel an offshore project. A June 2026 report from energy-market intelligence provider OPIS said two major Chinese photovoltaic manufacturing projects in the Middle East had largely stalled, one of which appeared to be Drinda’s. The other involved a silicon ingot and wafer producer. Chinese companies have also abandoned a number of solar manufacturing projects in the U.S., after Washington said last year that any products from American-based plants with Chinese links would be ineligible for government subsidies.

All those different moving parts paint a mixed but broadly positive picture for Drinda and its peers. The industry’s prolonged downturn appears to be finally bottoming out, thanks to help from Beijing. And while Western tariffs and Chinese technology transfer restrictions appear to be dampening the overseas manufacturing wave, that could ultimately benefit companies by causing them to become more careful about their offshore investments.

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