Hemlock Semiconductor to close $1.2bn US polysilicon factory

Hemlock Semiconductor will shutter the $1.2bn polysilicon factory it finished building just two years ago in Tennessee, reflecting the sharp drop in polysilicon prices in recent years and the rippling effects of the US/China solar trade war.

Michigan-based Hemlock announced plans for the factory six years ago, at a time when solar-grade polysilicon fetched more than $250/kg on the spot market. Soon after that, the price of polysilicon collapsed, and it has never recovered, currently trading for less than $20/kg.

The biggest blow for Hemlock came last year, when China, home to many of the world’s biggest consumers of polysilicon, announced trade duties on US-made polysilicon.

China has recently taken steps to close the so-called Process-in-Trade loophole, which had allowed polysilicon suppliers to work around the duties.

REC Silicon, another US-based polysilicon supplier, earlier this year announced a joint venture in China, and recently said it will take steps to increase its customer base outside of China.

In October it emerged that Wacker Chemie, the Germany-based polysilicon maker, would delay completion of its $1.5bn polysilicon plant in Tennessee by at least a year and a half – pushing initial production into mid-2015.

Hemlock’s announcement is a major blow to the company itself – majority owned by Dow Corning – and the town of Clarksville, an hour outside Nashville, which was once promised hundreds of good-paying solar manufacturing jobs.

The plant opened in 2012, but was never ramped up, and by early 2013 Hemlock was already laying off workers in Tennessee.

The closure will affect just 50 workers, underscoring the gap between Hemlock's original vision for the plant and the current realities.

Hemlock made the closure announcement the day after the US Commerce Department finalised its own tariffs on China-made solar modules.

The combination of “industry oversupply" and “ongoing challenges presented by global trade disputes” prompted the factory closure, according to Hemlock.

There are “no economically viable options” remaining for Hemlock to operate the plant, says Hemlock president Denise Beachy.