Why would consolidation result in a lower capacity? All that's happening is bigger companies becoming bigger while a mix of gov policy and market forces during downturns squeezes out the little guys. Which is standard practice in modern state-capitalist societies.

Bigger companies aren't going to buy up smaller production that is not efficient. The smaller production just goes offline and gets scrapped. Solar panel production is at the point where you need to be doing economies of scale to really churn a profit at it.

You guys need to read up on what happens when a government subsidies something. The subsidies allows inefficient producers to stay in business and it also results in over production....which is what pushes the price artificially low. Once the subsidies end. The weakest go out of business and only the most efficient producers stay in business.

If I run a firm with lots of capacity and a thriving overseas trade, why would I buy up a competitor with no overseas business just to shut down their plant?

Because you will be buying it for less than the cost of the equipment in that plant + some of the best talent + their domestic customer list thrown in for free.