JinkoSolar - Earnings Call - Q2 2025
November 17, 2025
Transcript
Operator (participant)
Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co., Ltd.'s Second and Third Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. 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.
Stella Wang (Head of Investor Relations)
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. Li Xiande, 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 financials.
They will all be available to answer questions during the Q and 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 the 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.
Xiande Li (Chairman and CEO)
[Foreign language]
Stella Wang (Head of Investor Relations)
In the first three quarters of 2025, our global module shipments totaled 61.9 GW, once again ranking number one worldwide. Driven by our outstanding product performance and strong presence in high-value overseas markets, gross margin improved sequentially for two 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 two years started to bear fruit gradually. In the first three quarters, our cumulative energy storage system, the ESS shipments, exceeded 3.3 GWh, increasing significantly for two 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 are 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 economies 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 serve as a key driver of our overall gross margin expansion.
Xiande Li (Chairman and CEO)
[Foreign language]
Stella Wang (Head of Investor Relations)
In the second and third quarter, we continued 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 trends. Given that feed-in rules in all provinces are still in implementation phase, central and state-owned enterprises need some time to recalculate their IRR returns and adjust their business model 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.
Xiande Li (Chairman and CEO)
[Foreign language]
Stella Wang (Head of Investor Relations)
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 products with maximum power of 670 Wp 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.
Xiande Li (Chairman and CEO)
[Foreign language]
Stella Wang (Head of Investor Relations)
Since market-based electricity reform has removed the mandatory energy storage requirements, China's energy storage industry is accelerating its market-oriented development. With 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, the Middle East, and Latin America. In the U.S., the rapid expansion of AI data centers has led to unprecedented surge in electricity demand, straining domestic electricity supply. Solar-plus-storage has, therefore, emerged as a safer and more easily deployed solution. We expect global demand for energy storage to experience explosive growth, driven by increasing renewable energy penetration and declining storage system costs.
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 possess 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 GWh of pack capacity and five GWh of battery cell capacity, and continuously improve product performance through self-developed technological 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.
Xiande Li (Chairman and CEO)
[Foreign language]
Stella Wang (Head of Investor Relations)
In summary, the global supply chain is receding, 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 share. 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 next upward cycle.
Xiande Li (Chairman and CEO)
[Foreign language]
Stella Wang (Head of Investor Relations)
The 15th Five-Year Plan proposes accelerating the decarbonization of both the energy supply and consumption 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 measures will further strengthen the competitiveness of China's renewable energy sector and steer the industry back onto a healthy and rational development path.
Xiande Li (Chairman and CEO)
[Foreign language]
Stella Wang (Head of Investor Relations)
Looking forward to the fourth quarter and 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 to 100 gigawatts for the full year of 2025, and ESS shipments to be six gigawatts for the full year 2025.
Gener Miao (CMO)
Thank you, Mr. Li. Total shipments were 21.5 gigawatts in the quarter, with module shipments accounting for 93%. By the end of the quarter, we became the first module manufacturer in the industry to achieve accumulative global module shipments of 370 gigawatts, with total accumulative 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 quarter, double sequentially. Against the backdrop of the electricity market reform, customer demand for high-power products continues to rise. Our high-power Tiger Neo 3.0 series, with its efficiency rate of 85% and excellent low-light performance, can generate stable electricity during storms, dust, and cloudy weather, effectively extending power generation hours.
At the same time, in a 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 outdoor field test data in Chengdu, China, under low-light conditions such as storm and dust, Tiger Neo achieves a 7.2% gain compared to BC products, and in Kagoshima, Japan, Tiger Neo shows 10.79% yield advantage over BC products in low-light conditions. In the third quarter, we delivered some high-power products that carry 1-2 US cents premium compared to conventional products. We expect our high-power Tiger Neo 3.0 products with maximum power of up to 670 watt-peak to be produced in large scale next year, further strengthening our competitiveness on the product side.
We once again topped the PV Tech 2024 Q3 ModuleTech Bankability rating with AAA ratings thanks to our solid operational capabilities, outstanding technological innovation, and strong recognition from global customers. As one of the few enterprises to continuously maintain top-tier creditworthiness and technological strength in the global PV industry, in the latest release of BNEF Energy Storage Tier 1 List of 4Q 2024, 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 CSA score continues to improve from 2023, rising significantly to 78, far ahead of the industry. On the demand side, we expect global PV demand to slightly contract in 2025.
In China, due to the implementation of Document No. 136, the pace of carrying out the 15th Five-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 centers, 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 three to five years. The Information Office of the 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 invisible and accelerating trend. 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 chains in response to policy changes to provide U.S. customers with long-term, stable, and reliable solutions. We are confident that leveraging our advantages 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.
Pan Li (CFO)
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 two 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 2025. Moving to the details in the third quarter, total revenue was $2.27 billion, down 10 percentage points 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 the year over year decrease was mainly due to the 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 a decrease in shipping costs, our solar module shipment decreased and the average freight rate declined 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 last year. Operating loss margin was 8.7% compared with operating loss margin of 7.7% in the second quarter this year and operating profit margin of 0.3% in the third quarter last year.
Moving to the balance sheet, at the end of the third quarter, our cash equivalents were $3.3 billion compared with $3.4 billion at the end of the second quarter of 2025 and $3.2 billion at the end of the third quarter of 2024. 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 the 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 an increase in the 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 product sold, while year over year decrease was mainly due to the decrease in the 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 was 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 2025 and 16.9% in the second quarter of 2024. 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 the 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 $33.3 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 (participant)
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Philip Shen with Roth Capital Partners.
Philip Shen (Senior Research Analyst)
Hi, everyone. Thank you for taking my questions. First one's on your gross margins. Can you share some color on what you see as the difference between yours and Canadian Solar's? 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.
Charlie Cao (CFO)
Thanks, Philip, and I think compared to our peer, particularly the Canadian Solar, the gross margin difference is the different revenue contribution from the energy storage business, but if you look at the Jinko quarter by quarter, we did improve gross margin dramatically. It's coming from the majority of 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 growth 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 GWh shipments, and next year, we expect to double, at least double.
And in terms of revenue recognition, it's a little bit different because the revenue is recognized for the shipments with the final acceptance. It's a little bit delayed, one quarter to two quarters. And for the energy storage business, the gross margin is at a 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 a very, we are actually, we think our business is shifting from purely module business to module plus ESS next year.
Philip Shen (Senior Research Analyst)
Great, Charlie. Thank you very much for the color. And 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 six 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? Thanks.
Charlie Cao (CFO)
Yeah, yeah. This year is six gigawatt-hours. Next year is double, okay? That is the total volume. In terms of geographical distributions and non-China, roughly we think 70%, 80%, including the United States. And the United States, we are in discussion with a lot of potential customers, and it's developing. And we believe step by step, we are getting more and more orders from the U.S. But we are getting a lot, we have strong pipelines, particularly, I think, from Europe, Latin America, and Asia-Pacific.
Philip Shen (Senior Research Analyst)
Got it. Okay. Great. Thank you. 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? Thanks.
Charlie Cao (CFO)
Yeah. And looking for the next year, we don't believe there's a lot of kind of impact, negative impact from the FEOC, let's say IRA compliance. We are seeing a lot of safe harbor projects, particularly for the solar-plus-storage projects. And we committed to, from long term, and I think we reshape our supply chain globally, 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, and we will let the investor know. But we have been in the process of discussing with potential investors.
Philip Shen (Senior Research Analyst)
Got it. Okay. Thank you, Charlie. I'll pass it on.
Charlie Cao (CFO)
Welcome.
Operator (participant)
Our next question comes from Alan Lau with Jefferies.
Alan Lau (Control Group, IB and Research Compliance)
Hello. This is Alan from Jefferies. Thanks for taking my question. So my first question is about the ESS business. Would like to know if there's any discussion with any of the AI data centers or hyperscale clients, and what type of demand are they requiring? Are they more like two to four hours of good capability compatible demand, or it's more like even longer hours of storage requirement? Thank you.
Charlie Cao (CFO)
Yeah. We think the AI-driven data center is going to put a lot of demand for the global electricity from long term, and our ESS team is in discussion with potential pipelines for the data center, including 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.
Alan Lau (Control Group, IB and Research Compliance)
I see. Clear. Thanks. So in relation to the geographical breakdown, we'd like to know if the gross margin of ESS is similar across the regions, or it should be higher in Europe or U.S.? How do you see the margins in different regions that you operate?
Charlie Cao (CFO)
You mean the ESS margin, different regions, right?
Alan Lau (Control Group, IB and Research Compliance)
Yeah.
Charlie Cao (CFO)
Yeah. 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., it's still, we think there is a decent gross margin, and the Middle East is a little bit low, and I think China and Middle East is ESS, the pricing, the competitiveness, and the margin is relatively low to other regions, but we think they are very healthy and business in the next two years.
Alan Lau (Control Group, IB and Research Compliance)
Yep. Would like to know on the cost side of ESS because I've noticed that the upstream raw materials, 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 even more upstream battery materials like lithium carbonate, etc.?
Charlie Cao (CFO)
Yeah. Because the strong demand, the materials are likely upwards. And firstly, we have five gigawatts in battery capacities, which puts us a little bit at an advantage. And the second one, we partner with key material suppliers. When we negotiate a contract, we did anticipate some kind of material cost upwards. So it's a combination. I think it's a little bit challenging, but we think we can manage and how to minimize the impact of the material pricing.
Alan Lau (Control Group, IB and Research Compliance)
I see. I think my next question is about the demand on the solar module market. So how do you see the demand growth in next year for maybe both solar and ESS? What is the growth rate you see?
Gener Miao (CMO)
Yeah. For the demand side, definitely we should look in separately for both 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 in 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 a 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. Suddenly, 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, we think it will be at least a 25% increase for the BESS year over year.
Alan Lau (Control Group, IB and Research Compliance)
I see. Thanks, Gener. And we'd like to know what type of installation in China are you looking at? Because there are different numbers floating around. Are you looking at low 200s or even below 200 gigawatts in China?
Gener Miao (CMO)
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 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 numbers, it should be somewhere around low-200s.
Alan Lau (Control Group, IB and Research Compliance)
Okay. That's very clear. Thanks a lot. I think my last question is on the buyback. We'd like to know if the company would start buyback after the Blackout Period basically resolve, and how is the pace of the buyback will look like? Thank you.
Pan Li (CFO)
We monetize 3%, right, each year, and I think the end of October, and we are in the process to get money out of China after the regulatory approval, and we have paid withholding tax, and we expect to get the money by the end of this month and very soon. For the shareholder returns, we commit at least $100 million a year, and we had declared dividend early this year, and we bought some shares, certain shares, I think last quarter in the middle of this year and after the window, after the earnings release, and we plan to purchase a share out of the end of the year.
Alan Lau (Control Group, IB and Research Compliance)
Is there how much shares to have been purchased, or will the company looking to basically buy all the remaining amount in the buyback program in the remaining one month?
Pan Li (CFO)
Yes. And I think we plan to use the proceeds from the monetization issues as the key funding which is available, and it's around $170 million. So I think depending on how the market moves, but definitely we will repurchase the shares by the end of this year. And roughly, I think this year, $100 million, and we had declared dividend, I think $50-$60 million. So that's our base plan.
Alan Lau (Control Group, IB and Research Compliance)
I see. That's clear.
Charlie Cao (CFO)
We will.
Alan Lau (Control Group, IB and Research Compliance)
Yep.
Charlie Cao (CFO)
Yes. It's a year-over-year plan, and next year, it's roughly the same plan.
Alan Lau (Control Group, IB and Research Compliance)
I see. That's clear. Thank you. Thanks, Charlie.
Charlie Cao (CFO)
Thank you.
Operator (participant)
Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Rajiv Chaudhri with Sunsara Capital.
Rajiv Chaudhri (President)
Good morning. My first question is regarding your guidance for module shipments for the fourth quarter. It's a very big range, 18-33 gigawatts, and you have essentially kept to the same range that you gave for the full year back in the 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?
Charlie Cao (CFO)
Yeah. 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.
Rajiv Chaudhri (President)
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?
Charlie Cao (CFO)
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.
Rajiv Chaudhri (President)
And do you believe that 700 gigawatts would actually have been shipped out by the industry as well, or that was just the production?
Charlie Cao (CFO)
I think it's more realized to a production closer to the production side, but because every company has 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. Production-wise, I think the number is more realistic.
Rajiv Chaudhri (President)
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?
Charlie Cao (CFO)
It's roughly RMB 5 billion this year, next year. And next year, we begin to have a plan to expand 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 customers next year, roughly 60%. So we will go with price premium and relatively good margin contributions next year, quarter over quarter. The capacity for the high-end, upgraded high-end module capacity will be released quarter by quarter.
Rajiv Chaudhri (President)
So Charlie, just to be clear, this year, the CapEx is RMB 5 billion, and next year, it will be flat at 5 billion?
Charlie Cao (CFO)
Yeah, roughly. But next year, I talk about it. This year, it's a roughly payment of outstanding amount, RMB 5 billion. Next year, we are doing the upgrade of existing capacity to the next high-level TOPCon capacity. And we foresee a lot of strong demands and with higher module price and higher gross margin contributions.
Rajiv Chaudhri (President)
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?
Charlie Cao (CFO)
Yes. Yes. That's right. That's right. And we talk about firstly. I think the catalyst is first one is ESS storage business next year. We are looking to 10% to 15% revenue contributions from ESS with decent gross margin and positive net profitabilities. And second one is the module business. We have, I think, the most advanced TOPCon upgrade capacities in the industries and developed by ourselves for the technology, which will roughly have 60% shipments 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 of the industry, anti-involution taking effect step by step, and the capacity will accelerate, phase out, and leading by the on top of that, industry-leading self-discipline, 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 recovering step by step. And Jinko, we are getting ready from the market and product perspective. And plus, we are shifting solar plus ESS story and the business. So the basic plan next year, we are trying now, 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.
Rajiv Chaudhri (President)
So, should we now? 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 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?
Charlie Cao (CFO)
Yes. Yes. Initially, by design, the cost is a little bit higher, but a very, very small increase in marginal cost. And by the way, our R&D team continued to dive into the details and to try to further improve the cost. But back to your question, I think the high-end products, the cost is 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.
Rajiv Chaudhri (President)
Final question, Charlie. On market share, in the past, in 2023 and 2024, 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? And what do you think the range for next year's module shipments could be?
Charlie Cao (CFO)
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 a very good for Tier One companies. If you look at the long term, we are confident and we will continue to penetrate the market here. The next year is still, I think, from the top-down approach. 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.
Rajiv Chaudhri (President)
I see. Okay. Thank you very much.
Charlie Cao (CFO)
You're welcome. You're welcome.
Operator (participant)
Your next question comes from Philip Shen with Roth Capital Partners.
Philip Shen (Senior Research Analyst)
Yes. Thanks for taking my follow-up questions. I want to check back in with you in terms of Q4 margin outlook. What kind of solar and module ASP could we see in Q4, and then what kind of margin for the overall quarter could we see? Thanks.
Charlie Cao (CFO)
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. But the contribution is not significant, but next year is a different story that we have talked about. And for the module business, we expect relatively stable.
Philip Shen (Senior Research Analyst)
Okay. Got it. Thanks. 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. Thanks.
Charlie Cao (CFO)
Yeah. So 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 US, the guidance of the FEOC or material assistance, or even upcoming 232, which will significantly impact the market prices. Like in China, there are 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.
Philip Shen (Senior Research Analyst)
Okay, Charlie. That makes sense. You talked about the rumors on Poly. Can you give us a little bit more color on that? Thanks.
Charlie Cao (CFO)
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.
Philip Shen (Senior Research Analyst)
Yeah. You mentioned it, so I thought I would try to see if there's more color.
Charlie Cao (CFO)
We are not part of the game, so I don't have too much to share with everyone. But thank you for your question.
Philip Shen (Senior Research Analyst)
Yep. No problem. Okay. Thank you, guys. I'll pass it on.
Operator (participant)
Your next question comes from Brian Lee with Goldman Sachs.
Tyler Bisset (Analyst)
Hey, guys. This is Tyler Bisset from Brian. Thanks for taking our question. Just quick housekeeping question. Can you share what was D&A and CapEx in 2Q and 3Q?
Charlie Cao (CFO)
You mean the absolute number of percentage, right? Hello? Hello.
Tyler Bisset (Analyst)
Yeah. Sorry. The actual number.
Charlie Cao (CFO)
I think in the financial statement, you're going to check out the financial statements, the R&D, and the operating expenses. And we have to disclose quarter by quarter. So what would be your key question you want to explore?
Tyler Bisset (Analyst)
Sorry. D&A and CapEx in 2Q and 3Q, the absolute numbers.
Charlie Cao (CFO)
D&A? You mean the depreciation or CapEx?
Tyler Bisset (Analyst)
Yes.
Charlie Cao (CFO)
Sorry.
Tyler Bisset (Analyst)
Depreciation and then separately CapEx.
Charlie Cao (CFO)
Okay. Depreciation by quarter, I think, is roughly and I think $300 million per quarter. And the CapEx, I think, is the first half year, we spend roughly $ 2 billion R&D.
Tyler Bisset (Analyst)
Thank you.
Charlie Cao (CFO)
Okay.
Operator (participant)
That is our last question, and that does conclude our conference for today. Thank you for participating. You may now disconnect.