Qilai Shen/Bloomberg
April 10, 2023
Synopsis
GCL Technology Holdings, the world’s second-largest manufacturer
of polysilicon, may pass on building its first factory outside China in the
United States due to high costs. The company wants to tap into higher prices
overseas and serve foreign customers, with a focus on Europe, the Middle East,
and BRICS countries. GCL's reticence on the United States stands in contrast to
three top Chinese solar equipment makers that have announced plans for US
factories. GCL plans to build a foreign factory through a joint venture with a
local industry leader and is likely to make announcements by the end of the
year. Polysilicon prices have fallen this year, and the company is betting on a
unique production method that is cheaper and more environmentally friendly.
Bloomberg News
A top solar material producer is planning its first factory
outside China, but may pass on the United States because of high costs,
according to the company’s chief executive.
GCL Technology Holdings, the world’s second-largest
manufacturer of polysilicon, wants to tap into higher prices overseas and serve
foreign customers, according to Lan Tianshi, the company’s joint-CEO. Countries
around the world are trying to develop their own supply chains for solar panels
to compete with China’s dominance in the sector.
While the United States took a major step forward in that
regard with last year’s passage of the Inflation Reduction Act, building a
factory there is still at least five times more expensive than in China and
construction times are bogged down by regulatory requirements, according to
Lan. Nothing has been decided, but GCL has been focusing its search efforts on
Europe, the Middle East and BRICS countries, he said in an interview.
“U.S. policies are attractive, but not attractive enough,”
Lan said.
GCL’s reticence on the United States stands in contrast to
three top Chinese solar equipment makers that have announced plans of U.S.
factories since passage of the IRA, which includes $374 billion in new
climate-related spending and is designed to boost domestic renewable
manufacturing capacities.
Suzhou, Jiangsu-based GCL plans to build a foreign factory
through a joint venture with a local industry leader, and is likely to make
announcements by the end of the year, Lan said. Given the higher prices of polysilicon
outside of China, its overseas factory could reap double or triple the profit
of Chinese facilities, he said.
GCL’s operations in China include a polysilicon plant in
Xinjiang, where the United States and others have accused the government of human
rights abuses against the ethnic Uyghur Muslim population, and of forcing them
to work in factories against their will. China has repeatedly denied the
claims, saying these are part of a conspiracy to undermine domestic industries.
The United States last year passed a law forbidding the
import of goods from the region unless companies can prove they weren’t made
with forced labor, slowing the flow of solar panels to the country. Lan said
GCL stands with the Chinese government on human rights issues, but will adapt
to its buyers needs when it comes to manufacturing locations.
“We greatly respect others’ views on us and their choices of
supply chain,” Lan said. “Wherever we build our factories and wherever our
products go, in a broader scale, they are all efforts to fight climate change.”
Polysilicon is a highly refined form of silicon found in
common sand, and is melted and sliced into thin squares that are eventually
formed into solar panels. Prices of the material surged to the highest in a
decade last year as demand surged beyond the capacity of existing factories.
GCL cashed in on the rush, with its net income more than tripling in 2022.
Prices have fallen this year as new factories come online,
and could drop to as low as $10 to $13 a kilogram in the second half compared
to about $39 at last year’s peak, according to BloombergNEF. Lan acknowledged
the drop in prices but said he expects them to be more resilient than
expectations - between $17 and $20 this year - because of strong demand for
high-quality material.
“Polysilicon makers will return to a relatively normal
profit margin this year as the unbalance between supply and demand begins to
ease,” Lan said.
The company is also betting on a somewhat unique production
method. Most polysilicon is produced using what’s known as the Siemens Process,
requiring massive amounts of heat and caustic chemicals to remove impurities,
creating material where less than one atom in every million is something other
than silicon.
GCL’s fluidized bed reactor technology uses far less energy,
making it cheaper and more environmentally friendly. Competitors have accused
the end product of being lower in quality, but Lan said it’s now pure enough
for the most advanced solar panels and even some lower-end semiconductors. The
company could enjoy three to five years of relatively high return rates with
the self-developed technology because of protections from intellectual property
laws, Lan said.
Source: https://bit.ly/3Ktz6wy
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