China Merchants Securities: High Silver Prices Accelerate Large-Scale Application of Silver-Replacing Paste, Paste Technology Revolution May Be the Breakthrough Point for Supply-Side Reform This Round

China Merchants Securities releases a research report stating that, in recent years, silver prices have continued to rise, especially after a sharp increase in 2025, causing slurry material costs to surpass silicon material costs. The significant fluctuations in silver prices have a huge impact on industry chain profitability, making metal substitution more urgent. Based on industry feedback, deep cooperation in powder, slurry, and battery segments has achieved positive progress in replacing silver with copper. If industrialization proceeds smoothly, all participating links are expected to reap substantial rewards. Considering the slower pace of technological diffusion at the cycle bottom, slurry technology innovation may be the breakthrough point for this supply-side round.

China Merchants Securities’ main points are as follows:

Slurry is a key material in battery manufacturing, affecting battery efficiency

The overall structure of solar cells is based on large-area PN junctions. Under illumination, photogenerated electrons are collected through fine grid lines and main busbars printed on the surface of the cell, then conducted via solder strips to external circuits to perform work, converting light energy into electrical energy. The front and back grid lines of the cell are made by printing slurry, enabling current collection at the cell level. These grid lines are divided into fine and main grids based on shape and function. Their design influences light absorption, and their material formulation affects the recombination performance, determining the cell’s equivalent resistance. Therefore, slurry is extremely critical to the photovoltaic cell’s photoelectric conversion efficiency and module performance.

Silver is more important than silicon, reducing silver offers the greatest potential for cost savings

Historically, battery slurry mainly used silver-based systems. After silver prices surged, the proportion of slurry in non-silicon costs of batteries increased significantly. Taking mainstream TOPCon batteries as an example, the cost per watt rose from about 0.06 yuan to 0.1-0.2 yuan (considering silver price fluctuations), surpassing silicon material costs and becoming the largest cost component of the battery. Reducing silver consumption has become a key focus for cost reduction across the industry chain.

Industry progress is positive, with potential for large-scale application

Cost reduction has mainly been achieved through two approaches: 1) reducing the width of fine grid lines; 2) increasing the number of main busbars. After increasing the number of busbars, their width becomes thinner, reducing silver consumption. Under silver-based systems, the reduction in slurry usage is limited because higher cell efficiencies mean slurry’s role in current collection is more critical, making it difficult to significantly decrease slurry volume. Therefore, replacing silver with metals that have lower costs is widely recognized as a cost-saving strategy.

The resistivity difference between copper and silver is small. Starting in 2024, mainstream N-type TOPCon batteries will begin exploring copper-based solutions, including schemes such as silver-coated copper and pure copper slurry. Metallization processes include screen printing + sintering, electroplating, etc. Deep cooperation across powder, slurry, and battery segments has made positive progress. Industry feedback suggests that by 2026, large-scale application of metal substitution could be feasible.

After significant profit adjustments across the industry chain, metallization schemes may widen the gap between leading and lagging companies

Since 2023, photovoltaic industry chain prices have undergone substantial adjustments, putting most companies under operational pressure. The differences between products have substantially narrowed. Metal substitution becomes a key step to differentiate companies: on one hand, due to the huge cost advantage of reducing silver; on the other hand, only some top-tier companies continue R&D at the industry cycle bottom, while many second- and third-tier companies fall behind. The barriers created by technological breakthroughs are harder to overcome, potentially becoming the breakthrough point on this supply side.

Risk warnings

Industrialization progress below expectations; market demand declines sharply; rapid technological diffusion risks.