A Tennessee manufacturing site that U.S. officials had hoped to preserve as part of an effort to secure the domestic semiconductor supply chain now faces the prospect of shuttering after its two last customers left, according to people familiar with the situation.
Germany-based Wacker Chemie, which produces polysilicon used in semiconductors and solar panels, is weighing a decision in the coming weeks on whether to close its Charleston, Tennessee plant, the sources said. The facility employs roughly 600 workers.
The names of the two customers that departed the plant were not confirmed. Sources described the customer exits as linked to a White House proclamation issued last month intended to promote purchases of U.S.-made polysilicon, and declined to be identified because the matter is not public.
Wacker provided limited comment. The company did not speak directly about the loss of specific customers or a possible plant shutdown, saying it was too early to fully gauge the policy's impact. In a statement, Wacker said the proclamation "does not, as it reads now, effectively support the use of U.S. made polysilicon." The company added that it is in active discussions with the administration about options to meet the policy goal of protecting domestic producers.
The situation in Charleston is presented by sources as another instance in which a Trump administration trade policy has not produced the intended support for an industry it sought to help. The article notes that earlier steel and aluminum tariffs raised costs for U.S. automakers, undermining their competitiveness with imports until further action was taken.
The episode also highlights questions about the administration's ability to shelter the U.S. chip supply chain from Chinese market dominance. Chinese firms, long leaders in solar-grade polysilicon, have begun to gain ground in the market for the more highly refined semiconductor-grade product, according to the reporting.
The Coalition for a Prosperous America, a group that supports tariffs and industrial policy, has called for implementing rules that would reward purchases of American polysilicon. The coalition pointed out that only two companies produce the material domestically, and urged clearer incentives so that U.S.-made polysilicon could underpin both the solar and semiconductor supply chains. "Without a clear signal that domestic polysilicon will be the foundation of both the solar and semiconductor supply chains, we risk ceding both to foreign competitors and adversarial nations like China," said Nick Iacovella, a spokesperson for the group. "That is a direct national security threat."
The Department of Commerce did not respond to requests for comment. A Trump administration official told reporters that the government "continues to engage with industry stakeholders" as it develops its approach to reshoring polysilicon manufacturing.
The trade measures announced on August 6 include a price floor as well as a tariff on imported polysilicon ingots, wafers, cells and finished solar panels. However, the rules apply the same treatment to products made overseas regardless of the origin of the polysilicon used in them. That equal treatment effectively leaves U.S.-made polysilicon at a disadvantage because it can be up to four times more expensive, according to market research firm Bernreuter Research.
Analysts who have reviewed the policy as currently written expect limited benefit to domestic producers. "We don’t expect the Section 232 tariffs, as currently structured, to boost demand for U.S. polysilicon," said Elissa Pierce, a research analyst at Wood Mackenzie.
The proclamation includes a provision authorizing Commerce to offer incentives to companies that invest in U.S. polysilicon production, but those incentives must be negotiated on a company-by-company basis. Industry reactions have varied. The measure was welcomed by United Solar Polysilicon, an Oman-based firm with ties to China. By contrast, Hemlock Semiconductor, the only other U.S. producer noted in reporting, appears somewhat insulated because its owner, Corning, buys its solar-grade polysilicon to make wafers domestically.
Wacker's operations both in Germany and the United States have faced pressure from Chinese competition. The company reduced staff at the $2.5 billion Charleston plant last year, and CEO Christian Hartel warned investors in the days before the proclamation that Wacker could have "one plant too many" if the expected trade action did not provide material benefit.
Summary
A Charleston, Tennessee polysilicon factory run by Wacker Chemie may be closed after two remaining customers left following the Trump administration's trade measures intended to support U.S. polysilicon. The proclamation's present form treats imported products equally to U.S.-made goods, leaving domestic polysilicon at cost disadvantage, and Commerce incentives must be negotiated case-by-case.
Key points
- Wacker Chemie's Charleston plant, which employs about 600 people, could be shut down after losing its two remaining customers.
- The White House proclamation aims to encourage purchases of American polysilicon but, as written, treats products made abroad and domestically the same, preserving a price disadvantage for U.S. producers.
- Sectors affected include semiconductor manufacturing and solar supply chains, along with domestic polysilicon producers and related manufacturing jobs.
Risks and uncertainties
- It is unclear whether the Commerce Department's company-specific incentives will be sufficient or timely enough to prevent plant closures; this affects domestic manufacturing and employment in the polysilicon sector.
- Current trade rules may not increase demand for U.S.-made polysilicon because of the significant cost differential versus foreign suppliers, posing a market risk to domestic producers and to supply-chain resiliency.
- The degree to which policymakers can shield the semiconductor-grade polysilicon market from competitors, particularly Chinese firms that have expanded into higher-grade material, remains uncertain and could influence longer-term supply-chain outcomes.
Note: The article reflects information provided by sources and statements from companies and industry groups. Some company and government responses were limited or pending.