Korean solar corporations are on high alert over the Donald Trump administration's final sanctions plan targeting Chinese solar corporations. There is an expectation that the more the U.S. government strengthens checks on Chinese corporations, the more domestic corporations will enjoy windfall gains.
However, because the intent is to protect its own solar manufacturing supply chain, a precise analysis will only be possible once sanctioned items and country criteria are announced. Some also voiced concerns about weakened profitability due to higher polysilicon costs and shrinking demand due to higher construction expense.
According to the solar industry on the 6th, foreign media including Reuters reported on the 4th (local time) that the U.S. Department of Commerce, based on the results of an investigation under Section 232 of the Trade Expansion Act, is preparing trade sanctions to introduce a price floor and impose tariffs on polysilicon and related derivative products. Specific sanction criteria and measures are expected to be announced at the end of this month.
Section 232 of the Trade Expansion Act is a law that allows the president, if importing certain items into the United States is deemed to threaten national security, to impose trade sanctions such as import restrictions and tariff imposition without separate congressional consent.
The U.S. government has so far rolled out multiple sanctions targeting Chinese solar corporations. Even so, Chinese corporations, backed by subsidies from the Chinese government, have sold polysilicon in the United States below cost, driving other competitors to the brink. Even when the United States imposed high tariff rates on Chinese polysilicon, the price was low enough to undercut other products.
If a price floor, cited as one of the sanctions in this plan, is introduced, polysilicon will not be allowed to be sold below a certain amount when entering the United States. In other words, the government would set a floor so that imports cannot collapse market prices. If additional taxes are levied on the grounds that they are Chinese-made, Chinese products will be even less competitive.
Non-Chinese polysilicon corporations are expected to benefit. Representative examples include Korea's OCI Holdings, the United States' Hemlock, and Germany's Wacker Chemie. If U.S. solar developers must use modules made with non-Chinese polysilicon, the three companies' products would command a price premium and purchases would inevitably increase.
Combined, the three companies' polysilicon production capacity for the U.S. market is about 110,000 tons per year. Wacker Chemie's Tennessee plant in the United States is estimated at 70,000 tons, OCI Holdings' Malaysia plant at 35,000 tons, and Hemlock's Michigan plant at 5,000 tons. That is enough to produce about 40 gigawatts (GW) of solar modules.
According to the Solar Energy Industries Association (SEIA), annual new solar installation demand in the United States is about 43–44 GW per year. In other words, the amount of polysilicon produced by the three non-Chinese companies can almost cover U.S. new solar installation demand.
In the case of OCI Holdings, it is sold out through 2028–2029 under long-term supply contracts with U.S. customers. It is expanding its Malaysia plant, and once completed, polysilicon production capacity is expected to increase from the current 35,000 tons per year to 70,000 tons.
Hanwha Solutions' Qcells institutional sector, which built the Solar Hub, a solar production base in Georgia, is also seen as highly likely to benefit. The Solar Hub is the largest integrated solar manufacturing complex in the United States, with an annual module production capacity of 8.4 GW.
The Solar Hub receives polysilicon from OCI Holdings and produces it into ingot/wafer→cell→module, making it a key element in building a non-Chinese supply chain.
If Qcells' solar module output increases, the amount of advanced manufacturing tax credit (AMPC) it receives from the U.S. government could also grow. Hanwha Solutions received a total of 1.3 trillion won in AMPC from 2023 to 2025. With the completion of the Solar Hub in Jul., it expects to receive more than 1 trillion won in AMPC annually.
An industry official said, "A concrete U.S. government sanctions plan needs to come out this month for analysis to be possible. In line with the intent of Section 232 of the Trade Expansion Act, there is a possibility that regulations will apply to 'the entire category of items imported into the United States.' Polysilicon prices could rise, making solar project expenses more expensive, which could lead to installation delays and weaker demand."
The official also said, "After all, the system was created to keep Chinese solar corporations in check, and the direction so far has been the same. Korean solar-related corporations classified as non-Chinese are highly likely to benefit."