The US’ pending trade dispute with China over solar cells and modules, covered on MetalMiner on Nov. 10, looks like it will be successful in encouraging China to review its sales strategy towards finished solar panels; this comes following advice received by trade lawyers hired by Chinese firms to advise them on the Commerce Department case, the NY Times reports.
Chinese solar panel manufacturers have apparently been advised they will stand little chance of success in the case, presumably because they are engaging in dumping and benefiting from subsidies, as US panel-makers claimed. Interestingly, like Japanese carmakers in the 1980s, Chinese solar panel manufacturers are said to be considering moving final assembly to the US so their panels become US-made.
However, because the case covers both cells and modules, China would have to give up cell manufacturing as well. The manufacture of solar panels is essentially a four-step process. According to the NY Times, molten polysilicon is used to grow crystals or cast blocks of polycrystalline silicon as the first step. The second step is cutting and polishing the material into thin, smooth wafers. The third involves chemically treating the wafer and adding electrical contacts — this essentially makes it a solar cell. The fourth requires connecting 60 to 72 cells together, covering them in glass, a frame and adding an electrical junction box to make the finished module. It is this last stage the Chinese are considering moving to the US.
Good news, you may think, US assembly jobs and taxes! No, this final step in the process is said to be worth only some 15 percent of the cost of a panel and is either largely automated or uses low skilled labor. The value is in stages 1 and 2, which China is looking to keep at home, while shipping the finished wafers to South Korea or Taiwan for stage 3, thereby hoping to circumvent potential duties on Chinese origin components. However, because most of the intellectual property and capital investment is in the cell stage, U.S. manufacturers say they are confident they can compete with cells and modules made in other countries where the product is not dumped or subsidized, even if the wafers come from China. So the case is unlikely to be amended to meet the Chinese attempts to get around origin issues.
Continued in Part Two.