JinkoSolar Holding Co., Ltd. (JKS) Earnings Call Transcript & Summary

Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co., Ltd.'s Second and Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Ms. Stella Wang, JinkoSolar's Investor Relations. Please proceed, Stella.

Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's Second and Third Quarter 2025 Earnings Conference Call. The company's results were released earlier today and available on the company's IR website at www.jinkosolar.com as well as on Newswire services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website. On the call today from JinkoSolar are Mr. Xiande Li and, Chairman and CEO of JinkoSolar Holding Co., Ltd.; Mr. Gener Miao, CMO of JinkoSolar Co., Ltd.; Mr. Pan Li, CFO of JinkoSolar Holding Co., Ltd.; and Mr. Charlie Cao, CFO of JinkoSolar Co., Ltd. Mr. Li will discuss JinkoSolar's business operations and company highlights, followed by Mr. Miao, who will talk about the sales and marketing; and then Mr. Pan Li, who will go through the financial. They will all be available to answer questions during the Q&A session that follows. Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in JinkoSolar's public filings with the Securities and Exchange Commission. JinkoSolar does not assume any obligation to update any forward-looking statements, except as required under applicable law. Now it's my pleasure to introduce Mr. Xiande Li, Chairman and CEO of JinkoSolar Holding. Mr. Li will speak in Mandarin, and I will translate his comments into English. Please go ahead, Mr. Li.

[Interpreted] In the first of 3 quarters of 2025, our global module shipments totaled 61.9 gigawatts, once again ranking #1 worldwide, driven by our outstanding product performance and strong presence in high-value overseas markets. Gross margin improved sequentially for 2 consecutive quarters to 2.9% in the second quarter and 7.3% in the third quarter. Net loss continued to narrow sequentially. We are pleased to see that our intensive efforts devoted to storage, R&D and products in the past 2 years started to bear fruit gradually. In the first of 3 quarters, our cumulative energy storage system, the ESS shipments exceeded 3.3 gigawatts hours, increasing significantly for 2 consecutive quarters. This, combined with the rising share of overseas markets has helped the profitability of our energy storage business improve noticeably. Considering that energy storage products in the process of installation, commissioning and acceptance, there will be a lag in revenue recognition in our financial statements. We are confident that as economics of scale accelerate and competitiveness continues to improve, our energy storage business will more than double next year. Its revenue contribution is expected to rise significantly and serves as a key driver of our overall gross margin expansion. In the second and third quarter, we continue to keep module utilization rates at a reasonable level. Since the third quarter, prices of polysilicon, wafers and cells have all risen and module prices showed some upward trend. Given that bidding rules in all provinces are still in implementation phase, central and state-owned enterprises need some time to recalculate their IR returns and adjust their business models for end projects. It is expected that demand will take some time to release. However, we have seen some positive signals in the raw material segment. Supported by rising raw material prices, module prices in overseas markets have also increased. The upgrade towards high-power production capacity has become an important direction for accelerating industry high-quality development. This technical upgrade also meets end customers' demand for high-power products to achieve more reliable investment returns. As an industry pioneer to upgrade existing TOPCon capacity through technology enhancements, we made steady progress in high-power product upgrades in the third quarter. We have already delivered some high-power products, carrying a premium of $0.01 to $0.02 per watt compared to the conventional products. As upgrade of the third-generation Tiger Neo product with maximum power of 670 watt is completed. We expect the shipment proportion of high-power products to increase quarter-over-quarter next year, accounting for 60% or above in 2026. Since market-based electricity reform has removed the mandatory energy storage requirement, China's energy storage industry is accelerating its market-oriented development. the increasing gap between peak and off-peak electricity prices and the implementation of policies such as capacity pricing and capacity compensation, independent energy storage projects in multiple provinces can achieve sound economic returns. Driven by both improving economics and global energy transition, demand is increasing in Europe, Asia Pacific, Middle East and Latin America. In the U.S., the rapid expansion of AI data centers has led to unprecedented surge in electricity demand, [indiscernible] domestic electricity supply, solar plus storage has therefore emerged as a safer and more easily deployed solution. We expect the global demand for energy storage to experience explosive growth driven by increasing renewable energy penetration and declining storage system cost. This once again validates our strategic decision to invest in the energy storage business in line with our industry trends, and it has helped us to build a long-term competitive advantage. As a leading enterprise in the PV sector, we possessed long-established advantages in channels, brand reputation and customer resources, enabling us to provide localized one-stop solar plus storage solutions. On the manufacturing side, we currently have 12 gigawatt hour of pack capacity and 5 gigawatt hour of battery cell capacity and continuously improve product performance through self-developed technology called breakthroughs. On the market side, we focus on high-margin overseas markets, particularly utility scale and industry and commercial projects. Although delivery cycles are relatively long, demand remains strong, providing stable and sustainable growth momentum for the company's energy storage business. In summary, the global supply chain is reshaping and the balance between supply and demand is gradually improving. As technological upgrades accelerate industry high-quality development, the market share of high power and high-value products will continue to expand and become a dominant force in market pricing. As market competition, particularly in project bidding increasingly favors leading enterprises that demonstrate strong technological capabilities and long-term reliability, resources such as bank financing are also concentrating towards leading enterprises, further strengthening their market shares. With strong technological capabilities, long-term reliability and global diversification of our energy storage business, we are well positioned to further strengthen our competitiveness and benefit from the industry's next upwards such cycle. The 15th 5-year plan proposed accelerating the decarbonization of both the energy supply and the construction sectors. The National Development and Reform Commission, NDRC, and the National Energy Administration, NEA, have also recently issued guidance on promoting renewable energy integration and power system regulation, further emphasizing the critical role of energy storage in the construction of a new energy system. We expect these matters will further strengthen the competitiveness of China's renewable energy sector and steer the industry back on to a healthy and rational development path. Looking forward to the fourth quarter and the full year, we will continue to actively respond to the industry's call for rational development by maintaining reasonable production levels and focusing on upgrading and transforming high-efficiency capacity. At the same time, we will proactively adapt to changes in overseas policies to ensure sustainable supply for our customers. We will keep strengthening our competitive advantages in technology and global operations, achieve a balance between scale and profitability while consolidating our industry-leading position. We expect total shipments, including solar modules, cells and wafers to be between 85 gigawatts to 100 gigawatts for the full year of 2025 and ESS shipments to be 6 gigawatts hours for the full year 2025.

Thank you, Mr. Li. Total shipments were 21.5 gigawatts in the third quarter with module shipments accounting for 93%. By the end of the third quarter, we became the first module manufacturer in the industry to achieve cumulative global module shipments of 370 gigawatts with total cumulative shipments of Tiger Neo series surpassing 200 gigawatts, the best-selling module series in history. In terms of geographic mix, in the third quarter, we focused on high-value overseas markets with shipments accounting for over 65%, achieving strong growth in Asia Pacific, emerging markets and Europe. Shipments to the U.S. were nearly 1.3 gigawatts in the third quarter, doubled sequentially. Against the backdrop of electricity market reform, customer demand for high-power products continues to rise. Our high-power type Neo 3.0 series with its bifaciality rate of 85% and excellent low light performance can generate stable electricity during storm, dark and cloudy weather, effectively extending power generation hours. At the same time, the market environment with increasing volatility in electricity spot prices, the outstanding power generation performance of Tiger Neo 3.0 enables more power generation during peak price periods in the morning and evening, creating higher yield and more reliable returns for clients. According to our hardware field test data in Chengdu, China in low light conditions such as storm and dust, Tiger Neo achieved a 7.2% gain compared to BC products. And in Kagoshima, Japan, Tiger Neo shows 10.79% gain over BC products in low light conditions. In the third quarter, we delivered some high-power products that carried $0.01 to $0.02 premium compared to conventional products. We expect our high-powered Tiger Neo 3.0 products with maximum power of up to 670 watts to be produced in large scale next year, further strengthening our competitiveness on the product side. We once again topped the PV Tech 2025 Q3 module bankability report with AAA ratings, thanks to our solid operational capabilities, outstanding technological innovation and strong recognition from global customers as one of the few [indiscernible] prices to continuously maintain top-tier credit worthiness and technological strength in the global PV industry. In the latest release of BNEF Energy Storage Tier 1 list of 4Q 2025, we were recognized as Tier 1 energy storage provider for the seventh consecutive quarter. Our continuous efforts in sustainable development have also earned international recognition repeatedly. In the recent MSCI ESG Rating, we were upgraded to an A rating, maintaining our position in the top tier of ESG performers in the global PV industry. Additionally, our S&P ESG score continues to improve from 2024, rising significantly to 78, far ahead of the industry. On the demand side, we expect global PV demand to slightly contract in 2026 in China, due to the implementation of policy reform at 136, the pace of carry out 15th 5-year plan as well as industry self-discipline and anti-involution measures, demand is expected to slightly decrease year-over-year in 2026. Markets outside China are generally expected to remain healthy. In the mid to long term, the urgent power demand from AI data center, combined with most countries commitment to reduce carbon emissions will jointly drive growth in the global deployment of clean energy and the new grid infrastructure over the next 3 to 5 years. The Information Office of State Council recently released the white paper of China's action on carbon peaking and carbon neutrality, which emphasizes that energy storage is a key support for building a new type of power system and advocates actively developing the renewable energy plus energy storage solutions. In the United States, we are already seeing some tech giants deploying co-located or nearby solar plus storage at their data centers to meet rapidly growing electricity needs. We believe renewable energy plus energy storage has become an investable and accelerating trends. We remain optimistic about the long-term prospects of the U.S. market. Although trade policies impose certain constraints on the manufacturing side, we have taken proactive measures and made early strategic deployments adjusting our manufacturing and supply chain in response to policy changes to provide U.S. customers with long-term, stable and reliable solutions. We are confident that leveraging our advantage in technology innovation, high-power products and global network, we can continue to satisfy our global clients' demand for clean, safe, high efficiency and reliable integrated solar and storage solutions. We will also continue to improve our competitiveness in global markets.

Thank you, Gener. We are pleased that our focus on high-performance products and high-value markets as well as our efforts in cost and expenses control have delivered steadily improved financial results. Gross profit margin turned positive in the second quarter and continued to improve by 4.4 percentage points in the third quarter. Net loss and adjusted net loss narrowed sequentially for 2 consecutive quarters. Operating cash flow was $340 million in the third quarter, improving significantly quarter-over-quarter. Operating cash flow is expected to be positive for the full year '25. Moving to the details in the third quarter. Total revenue was $2.27 billion, down 10% sequentially and 34% year-over-year. The sequential decrease was mainly due to a decrease in the solar module shipment and the year-over-year decrease was primarily due to a decrease in average selling price of solar modules. Gross margin was 7.3%. The sequential improvement was mainly due to a lower unit cost product sold and year-on-year decrease was mainly due to a decrease in ASP of solar modules. Total operating expenses were $363 million, up 36% sequentially and down 32% over a year. The sequential increase was primarily due to an increase in the impairment of long-lived assets, while the year-over-year decrease was mainly due to the decrease in shipping cost of solar module shipment decrease and the average freight rate decline during the third quarter this year. Total operating expenses accounted for 16% of total revenues compared to 10.6% in the second quarter and 15.4% in the third quarter of last year. Operating loss margin was 8.7% compared with operating loss margin of 10.7% in the second quarter this year and operating profit margin of 0.3% in the second quarter of last year. Moving to the balance sheet. At the end of the third quarter, our cash and cash equivalents were $3.3 billion compared with $3.4 billion in the end of the second quarter of '25 and $3.2 billion at the end of third quarter of '24. AR turnover days were 105 days compared with 97 days in the second quarter. Inventory turnover days were 90 days compared with 66 days in the second quarter this year. At the end of the third quarter, total debt was $6.4 billion compared to $6.7 billion at the end of the second quarter. Net debt was $3.1 billion compared with $3.3 billion at the end of second quarter this year. Debt conditions improved sequentially. Let me go into more details of the second quarter. Total revenue was $2.51 billion, up 30% sequentially and down 25% year-over-year. The sequential increase was primarily due to increase in solar module shipments, while the year-over-year decrease was mainly due to a decrease in the ASP of solar modules. Gross margin was 2.9%. The sequential improvement was mainly due to a lower unit cost of products sold, while year-over-year decrease was mainly due to the decrease in ASP of modules. Total operating expenses were $266 million, down 24% sequentially and 50% year-over-year. The sequential decrease was mainly due to the reduced expected credit loss expense in the second quarter, while the year-over-year decrease were mainly due to 3 points, a decrease in the impairment of long-lived assets, reduced expected credit loss expenses and decreased shipping costs as the average freight rate declined during the second quarter this year. Total operating expenses accounted for 10.6% of total revenues compared to 18.1% in the first quarter of '25 and 16.9% in the second quarter of '24. Operating loss margin was 7.7% compared to 20.7% in the first quarter this year and 4.7% in the second quarter last year. Moving to the balance sheet. At the end of the second quarter, our cash and cash equivalents was $3.4 billion compared with $3.77 billion at the end of the first quarter this year and $1.9 billion at the end of second quarter last year. AR turnover days were 97 days compared with 111 days in the first quarter this year. Inventory turnover days were 66 days compared to 84 days in the first quarter. Our operating efficiency is improving. At the end of the second quarter, total debt was $6.7 billion compared to $6.4 billion at the end of the first quarter. Net debt was $3.3 billion compared to $2.6 billion at the end of the first quarter this year. This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

[Operator Instructions] Your first question comes from Philip Shen with ROTH Capital Partners.

First one is on your gross margins. Can you share some color on what you see as the difference between yours and Canadian Solar? They reported recently 15%. You guys have Q3 gross margins at about 7%. And what was the main driver you think for that underperformance? And then can you provide some color on the storage and solar gross margin difference? And then finally, what do you think margins look like for Q4?

Thanks, Philip. And I think compared to our peers, particularly the Canadian Solar, the gross margin difference is the different revenue contribution from the energy storage business. And -- but if you look at the Jinko, quarter-by-quarter, we did improve gross margin dramatically, it's coming from majority the module business. But for the energy storage sectors, we did want to have a very, very positive update, I think in the prepared remarks of Chairman Li, and we think our energy storage business is ready for the dramatic goals in next year, 2026, and we are expecting significant revenue contributions and gross margin expansions. And the storage is really in supply shortage. And this year, we shipped around 6 gigawatt hours shipments. And next year, we expect to double, at least double. And in terms of revenue recognition, that's a little bit different because the revenue is recognized for the shipments with the final acceptance. It's a little bit delayed 1 quarter to 2 quarters. And for the energy storage business, the gross margin is at decent level. We expect at least 15%, 20% gross margin and looking forward, particularly for the ESS business out of China, and we target 70%, 80% ESS business next year. And in terms of revenue contribution from the energy storage business, we expect 10% to 15%. I mean, the revenue from ESS business compared to the total revenues of Jinko next year. So it's -- we are -- actually, we think our business is shifting from purely module business to module plus ESS next year.

Can you share also a little more color on your view? You've given us some color on the storage market. you shared that next year could be 6 gigawatt hours. What might the geographic shipment mix be for 2026? How much to the U.S., how much to China and then maybe Europe and others?

Yes. This year is 6 gigawatts hours. Next year is double, okay? That is the total volume. In terms of geographical distribution and non-China, roughly, we think 70%, 80%, including United States. And United States, we are in discussion with a lot of potential customers and developing, and we believe step-by-step, we are getting more and more orders from U.S., but we are getting a lot -- we have a strong pipeline, particularly, I think, from Europe, Latin America and Asia Pacific.

Shifting over to one more question here on the Foreign Entity of Concern for the U.S. FEOC. Can you help us understand, you plan to -- you have a big business shipping U.S. -- sorry, shipping solar modules to the U.S. Now you plan to ship batteries also to the U.S. Can you help us understand how you plan to comply with Foreign Entity of Concern requirements for the U.S. market?

And looking for the next year, we don't believe there's a lot of kind of impact -- negative impact from the failed, let's say, OBBB compliance. We see a lot of safe harbor projects, particularly for the solar plus some storage projects. And we committed to -- from long term, and we -- I think we reshape our supply chain globally and including -- and we are exploring options for our solar module facilities in Florida. And we think from the long term and there is going to be demand for both FEOC and non-FEOC. And we are in the -- if there is some kind of development, particularly for transforming our solar module facilities in the United States to the non-FEOC entities, then we will let investors know. But we have been in the process of discussion with potential investors.

Our next question comes from Alan Lau with Jefferies.

This is Alan from Jefferies. So my first question is about the ESS business. I would like to know if there's any discussion with any of the AI data centers or hyperscaler clients? And what type of demand are they requiring? Like are they more like 2 to 4 hours of good capability compatible demand or it's more like even longer hours of storage requirement?

Yes. We think the AI-driven data center is going to put a lot of demand for the global electricities from long term. And we're -- our ESS team is in discussion with potential pipelines for the data center, including the U.S., Europe and including China. But it's still in the progress, and we believe we are able to reach a significant milestone early next year.

So in relation to the geographical breakdown, I would like to know if the gross margin of ESS is similar across the regions, or it should be higher in Europe or U.S.? Like how do you see the margins in different regions that you operate?

You mean the ESS margin in different regions, right? Yes, it's depending on different markets and China is still a little bit low, but I think it's recovering a little bit. ESS is very competitive in China. But Europe and U.S. is still -- we think that it still is a decent gross margin. So -- and the Middle East is a little bit low. And I think China and Middle East's ESS, the pricing, the competitiveness and the margin is relatively low to other regions. But we think it's still very healthy business and -- in the next 2 years.

I would like to know on the cost side of ESS because I've noticed that the upstream raw materials are -- the cost of raw materials are increasing or surging. Any plans to lock in any raw materials? Or how is your view on different raw materials like batteries or like even more upstream battery materials like lithium carbonate, et cetera?

Because of the strong demand, the material is likely upwards. And firstly, we have 5 gigawatts battery capacities, which put us at relative advantage. And the second one, we partner with the key materials and suppliers and the second one, when we negotiate contracts, we did anticipate some kind of material cost upwards. So it's a combination. I think it's a little bit challenge, but we think we can manage on how to minimize the impact of the material -- the pricing.

I see. I think my next question is about the demand on the solar module market. So how do you see the demand growth next year for maybe both solar and ESS? Like what is the growth rate you see?

Yes. For the demand side, definitely, we should look in separately for both for PV and BESS, right? So for PV side, I think we are -- in a conservative way, we are expecting more or less a flat year in 2026 versus 2025. The main reason is because China demand we believe it will have a drop compared with 2025, which because the weight of China demand is so high than the global demand, which drives even with the other markets booming or other markets growth, we still expect the total demand of the globe in the PV industry for next year will be more or less flat year. However, when we look into the BESS, it is in a different scenario, right? So with more and more renewable installed, the grid needs more security for the BESS contribution, definitely we are seeing a sharp increase for the BESS side. That's why from the BESS; we are still keeping an optimistic opinion or expectation for next year's installation. If we need to quantify that, we think will be at least 25% increase for the BESS year-over-year.

I would like to know what type of installation in China are you looking at like because there are different numbers going around, like are you looking at low 200 or even below 200 gigawatts in China?

I'm not that conservative for China because recently, I visited a lot of our distributors and even installers in China in all the different provinces. I think most of them are still keeping an optimistic view for next year. So that -- having said all those, I believe that it will be around, let's say, module-wise, it will be around mid-200, let's say, around 250 about. And if we look into the grid connection number, it should be somewhere around the low 200s.

Okay. That's very clear. I think my last question is on the buyback. I would like to know if the company will start buyback after the blackout period which is basically this result and how is the pace of the buyback will look like?

We monetized 3% shares and -- I think at the end of October, and we are in a process to get money out of China and after the regulatory approval. And we have paid withholding tax, and we expect to get the money by the end of this month -- very soon. And for the shareholder, the shareholder returns, and we commit at least $100 million a year, and we had declared a dividend early this year. And we bought some shares, certain shares. And I think last quarter in the middle of this year. And after the window -- after the earnings release, we plan to repurchase the shares through the end of the year.

Is there like how much shares have been purchased or will the company be looking to basically buy all the remaining amount in the buyback program in the remaining 1 month?

Yes. And I think we plan to use the proceeds, right, the monetization issues as the key funding, which is available and it's around $180 million. So I think we -- depending on how the market moves, we -- definitely we will repurchase shares by the end of this year. And roughly, I think this year, $100 million, and we have declared a dividend, I think $50 million, $60 million. So that's the base plan. It's a year-over-year plan and next year, it's roughly the same plan.

Your next question comes from Rajiv Chaudhri with Sunsara Capital.

My first question is regarding your guidance for module shipments for the fourth quarter. It's a very big range, 18 to 33 gigawatts, and you have essentially kept to the same range that you gave for the full year back in early part of the year. But now we are halfway through the fourth quarter. Could you help us narrow down what the range would be for Q4 for module shipments?

Yes. I think we will close to the lower end of the range. I think because of the regulatory requirement; we have to keep that range as before. But from the operational level, we believe the lower end of the range is more, let's say, realistic.

I see. So related to that, what do you think the global shipments of modules would be for the industry as a whole in 2025?

Well, we -- technically, we believe from the production-wise, we are looking at roughly 700 gigawatts. That's the high-level numbers we are estimating for the whole industry.

And do you believe that 700 gigawatts would actually have been shipped out by the industry as well or that was just the production?

Well, I think it's more realized to a production -- closer to the production side, but because every company has a slightly different ways to calculate or announce their shipment numbers. So that's why it's difficult to figure out what's the real shipment number. But production-wise, I think the number is more realistic.

I see. Okay. So moving on to another question relating to CapEx. Could you give us the CapEx target for 2025 and also for 2026?

It's roughly RMB 5 billion this year and next year. And next year, we didn't have any plan to expand the capacity and it's kind of upgraded to the next-generation TOPCon technology, and it's going to have significant high-end, high-power output solar modules we are able to provide to our customer next year, roughly 60%. So with price premium and relatively good margin contribution next year quarter-over-quarter, the capacity for the high-end -- upgraded high-end module capacity will be released quarter-by-quarter.

So Charlie, just to be clear, this year, the CapEx is RMB 5 billion and next year, it will be flat at RMB 5 billion?

Yes, roughly, roughly. But next year, I talk about -- this year, it's roughly the payment of outstanding amount, RMB 5 billion. And next year, we are doing the upgrade of existing capacity to the next high-level TOPCon capacity. And we foresee a lot of strong demand and with higher module price and higher gross margin contributions.

So you made a very interesting point that operating cash flow will be positive in 2025. It looks like you will be generating operating cash flow positive in 2026 as well and maybe substantially higher than 2025 because the gross margin will be higher. Is that a correct assessment?

That's right. That's right. And we talk about, firstly, I think the catalyst of first one is the ESS storage business next year. We are looking to 10% to 15% revenue contributions from ESS with decent gross margin and positive net profitability. And second one is the module business. We have, I think, the most advanced TOPCon upgrade capacities in the industries and developed by ourselves technology, which will roughly have 60% shipment of the modules coming from the next-generation Jinko developed TOPCon capacities with higher gross margins. And second one, we think from the high-level standards, the industry anti-involutions take effect step by step and the capacity will accelerate phase out and leading by the -- on top of that industry-leading self-disciplined control of production volume and reasonable pricing based on the cost will take further, I think, enforcement. So combined together, I think the industry is reaching the low point and is recovering step by step. And Jinko, we are getting ready for the market and product perspective plus we are shifting solar plus ESS story and the business. So the basic plan next year, we are trying -- we are confident that we are able to navigate the cycles and turn to positive earnings. That's kind of the business plan next year.

So should we -- you talked about the premium products and the fact that they've got premium pricing. But on the cost side, will your costs for these premium products will still be lower than the cost for the standard products this year? In other words, do the costs keep going down even as the price goes up?

Yes. Initially, by design, the cost is a little bit higher, but they are very, very small incremental cost. And -- but we -- our R&D team continue to dive into the details and to try to further improve the cost. But back to your question, I think that the high-end products, the cost is -- it's a very, very small incremental cost increase at the beginning. But we believe over time, our R&D team with our operational teams will continue to improve the cost.

Final question, Charlie, on market share. In the past, in 2023 and '24, your global market share had gone up to somewhere between 15% and 16% of the global market. This year, it is down a little bit, I guess, partly because you have restrained production because of the pricing. Should we expect that your market share next year will go up again and maybe go up a lot more than 16% because the industry itself is consolidating. So -- and what do you think the range for next year module shipments could be?

The consolidated market share after consolidation of the industry consolidation and the phase out of capacity, the industry turned into the kind of normal situation, for sure, it's very good for Tier 1 companies. If you look at the long term, we are confident and we will continue to penetrate the market share. And next year is still, I think, from the top-down approach, and I think China will continue to launch -- implement the anti-involution policies. We don't expect significant shipments increase for the module business. But yes, it's different stories.

Your next question comes from Philip Shen with ROTH Capital Partners.

I want to check back in with you in terms of Q4 margin outlook. What kind of module [indiscernible] ASP could we see in Q4? And then what kind of margin for the overall quarter could we see?

We expect relatively stable Q4 versus Q3, but the ESS business is contributing more revenues. And we estimate our ESS business in fourth quarter is going to reach positive profitability levels. And -- but the contribution is not significant, but next year is a different story, we have talked about. And for the module business, we expect relatively stable.

And then can you talk about module ASPs for Q1 and Q2 of next year? And then also the trajectory for margins as you blend in more battery?

Yes. Phil, I think it's difficult to share those numbers or estimations right now because what is happening is like some of the key markets, they are still -- there are some key or some important policy is upcoming. For example, the U.S., the guidance of the FEOC or material assistance or even upcoming 232, which will significantly impact the market prices. Like in China, there's anti-involution policies and there's even more rumors coming out regarding the polysilicon even to the other part of the manufacturing value chain as well. So those changes could significantly change the market price overnight. That's why we believe it's still too early to share our estimation on the prices for next year.

Okay. That makes sense. You talked about the rumors on poly. Can you give us a little more color on that?

I don't have too much more to share based on there's a lot of rumors on the market or on the internet. So I don't know what you're referring to.

Yes. I was just -- you mentioned it, so I thought I would try to see if there's more color.

We are not part of the game, so I don't have too much to share with everyone. But thank you for your question.

Your next question comes from Brian Lee with Goldman Sachs.

This is Tyler Bisset on for Brian. Just a quick housekeeping question. Can you share what was D&A and CapEx in 2Q and 3Q?

You mean the absolute number of percentage, right?

Sorry, like the actual number.

I think it's in the financial statement, you check out the financial statement, the R&D and the operating expenses and we have disclosed quarter-by-quarter. So what would be your key question you want to explore?

Sorry, D&A and CapEx in 2Q and 3Q, like the absolute numbers?

You mean the depreciation or CapEx.

Depreciation and then separately CapEx.

Okay. Depreciation by quarter, I think it's roughly -- I think $300 million a quarter. And the CapEx, I think in the first half of the year, we spent roughly RMB 2 billion.

That is our last question, and that does conclude our conference for today. Thank you for participating. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]