US preparing price floor and tariffs for 'polysilicon', a solar and semiconductor material

US preparing price floor and tariffs for 'polysilicon', a solar and semiconductor material

Aimed at protecting US factories and curbing China's supply chain... Decision expected within August

Some also observe that continued imports from South Korea, Malaysia, Germany, etc. are inevitable for the time being

The Donald Trump administration is preparing to introduce a price floor and impose tariffs on 'polysilicon', a key material for solar panels and semiconductors, Reuters reported on the 4th (local time).

A decision is expected to be made within August.

The purpose of this is to protect polysilicon factories in the United States, such as those of Hemlock Semiconductor and Wacker Chemie, and to curb China in the supply chain sector.

Hemlock, which operates a factory in Michigan, is a joint venture between Corning and Japan's Shin-Etsu Handai. Wacker, headquartered in Munich, Germany, operates a factory in Tennessee.

This measure follows an investigation by the Trump administration since July last year into the impact of imports of polysilicon and its derivatives on national security, based on Section 232 of the 1962 Trade Expansion Act.

The relevant provision grants the President the authority to restrict imports through appropriate measures, such as tariffs, if it is determined that the import of certain items threatens national security.

The Trump administration is reportedly considering a mixed trade sanctions plan for polysilicon, combining the setting of a minimum import price with additional tariffs.

Separately, the US government raised the tariff rate on Chinese polysilicon and solar wafers from 25% to 50% as of January 1 last year, based on Section 301 of the Trade Act.

Polysilicon is an ultra-high purity form of silicon (Si) and is at the starting point of the semiconductor and solar supply chains.

It is estimated that more than 85-90% of this is used in solar power, with a much lower proportion for semiconductors.

According to data from the US Semiconductor Industry Association (SIA) cited by Reuters, the chip industry accounts for 2.4% of global polysilicon demand.

However, polysilicon for semiconductors has much greater strategic importance compared to its low volume proportion, given that it is a high-purity, high-value-added material.

Craig Singleton, a senior fellow at the bipartisan think tank 'Foundation for Defense of Democracies', said, "China has built polysilicon dominance through subsidies and chronic overproduction, which has pushed prices below sustainable levels and weakened competitors."

He added, "A combination of a minimum price and tariffs could give US producers room to survive, but the policy must be carefully adjusted to ensure a continued supply of reliable inputs while domestic wafer and cell production capacity catches up."

Solar manufacturing industry groups and a bipartisan group of federal lawmakers have argued in comments submitted to the Department of Commerce that until domestic polysilicon, wafer, and cell production expands in the US, imports should be made from non-Chinese producers such as Korea's OCI Holdings and Wacker, which has factories in Malaysia and Germany.

The Trump administration is in a position to balance the goal of supporting domestic producers with the side effect of increasing the cost of semiconductors and solar panels.

Martin Pochtaruk, CEO of Héliene, a panel manufacturer operating a factory in Minnesota, described the solar industry's situation as "collateral damage" from the US government's trade impact investigation, which focused on semiconductors.

A White House official told Reuters that President Trump would not comment before making a decision, and the Commerce Department did not respond to a request for comment.

The Chinese Embassy in the US criticized the trade investigation.

An embassy spokesperson said, "China urges the US to stop the Section 232 tariff measures as soon as possible and properly address the concerns of all parties through equal dialogue."

Following the Reuters report, shares of US-listed solar manufacturers such as Corning, Toyo, T1 Energy, and First Solar rose.

Corning, which had already risen 5.2% before the report, saw its increase expand to 10% and closed up 9.4%.

First Solar increased its gain from 1.8% to 4.7%, and T1 Energy jumped from 4.9% to 9.9%.

Canadian Solar's increase expanded from 3% to 5.6%, and Toyo, which had risen about 1% before the report, once jumped to 5% before closing up 1.7%.