In the wake of the GOP’s One Big Beautiful Bill’s passing, U.S. crystalline-silicon manufacturers face a new challenge.
Sourcing solar cells that will comply with new “foreign entity of concern” (or FEOC) provisions is likely to become both more difficult and more expensive. Meanwhile, a new antidumping and countervailing duty (AD/CVD) investigation launched on July 17 could choke the already narrow pipeline of compliant solar cells. Together, these new restrictions threaten the viability of all but the most well-capitalized players in the industry.
After weeks of debate on Capitol Hill about the budget bill, the 45X manufacturing tax credit was maintained, offering a fleeting glimmer of optimism amid dramatic cuts to other Inflation Reduction Act provisions. But that hope is dimmed by new uncertainties.
The FEOC provisions embedded in the OBBB require solar module manufacturers to source an increasing share of components from non-FEOC countries in order to qualify for federal tax incentives. (In solar, “non-FEOC” essentially means non-Chinese and non-Chinese-owned, though there is already confusion about the specifics of the definitions)
To claim benefits under sections 45Y and 48E — and the 10% “adder” under 45X — manufacturers must begin sourcing at least 50% of their module content (by cost) from non-FEOC countries by 2026. That threshold climbs steadily to 85% by 2029. The rules also prohibit extensive licensing arrangements with Chinese entities. For crystalline-silicon manufacturers, this means sourcing non-FEOC cells starting next year, and possibly wafers by 2027.
But the U.S. has just 4 to 5 gigawatts of domestic cell production — and 50 GW of module manufacturing. So even before OBBB, sourcing cells was already a hurdle. Now, the new AD/CVD investigation threatens to push compliant cell prices even higher, perhaps beyond reach.
AD/CVD case further restricts supply
Last Friday, a group supported by major U.S.-based manufacturers including First Solar and Qcells filed a new AD/CVD petition. If successful, it would impose duties on cell and module imports from Indonesia, India, and Laos — countries that were previously alternatives to China. This adds to an already lengthy list of affected nations, including China, Cambodia, Malaysia, Thailand, and Vietnam.
The timing is critical. A decision is expected by mid-2026, just as the FEOC sourcing mandates take hold. Alex Barrows, head of solar at commodity intelligence firm CRU, warns that compliant supply could become severely constrained. India, once seen as a likely beneficiary of the FEOC requirement, may now be cut off just as demand peaks.
“If you’re a U.S. module maker and you need to buy cells, there’s really not that much out there,” he told Latitude Media. “I mean, maybe you can buy some from one of the integrated players — maybe VSun or Qcells will sell you some of theirs.” (VSun is a Japanese-owned module maker, which is executing plans for 4 GW of wafer-to-module production in Vietnam.)
Barrows said that while CRU tallies approximately 30 GW of non-FEOC PV cell capacity also not impacted by AD/CVD provisions currently available, the vast majority of that is from integrated manufacturers, which use the cells in their own module production. Excluding those integrated sources, as well as Indonesia, Laos, and India, Barrows said, leaves the market with “only about 5 GW” at the end of this year.
Players poised to consolidate
These emerging constraints give a significant advantage to large, integrated manufacturers with upstream capabilities and deeper financial resources. These companies are better positioned to weather a downturn in demand, particularly as solar tax credits begin to expire earlier than originally expected. The result may be a wave of consolidation across the U.S. solar manufacturing base.
That shift is already underway. Chinese companies are exiting the U.S. market, opening the door for domestic players to seize more demand. On Monday, materials science company Corning announced that it has acquired JA Solar’s 2 GW module factory in Arizona. Corning also owns Hemlock Semiconductor and is planning to establish a $1.5 billion crystalline-silicon wafer plant in Michigan, which Barrows reports could add 6 GW of capacity (and more than double domestic capacity).
Meanwhile, Qcells is investing in 3.3 GW of ingot and wafer capacity in Georgia, although industry insiders caution that the company has previously faced delays in ramping its upstream U.S. manufacturing on schedule.
Complex, but possible
Michael Parr, executive director of the Ultra Low-Carbon Solar Alliance, is cautiously optimistic about the potential of domestic crystalline-silicon production. He believes that a compliant, non-FEOC supply chain is “reasonably manageable” — but also warns that the rushed nature of current policy paired with rising costs could chill demand for U.S.-made modules.
“If you have U.S. wafer, U.S. poly, and U.S. cell [production] you’re in pretty good shape. But with very limited wafer and cell capacity at the moment and little incentive for any further investment, things have pretty well been undermined,” said Parr, adding that other materials like glass, frames, junction boxes, and encapsulants will pose a further challenge. “It feels like the FEOC rules were intentionally written to make them difficult to comply with.”
Parr is skeptical that new U.S. cell factories will be built in the near term, given the cost, complexity, and slow ramp-up time involved.
“The big driver for the cell guys was the domestic content bonus, 45X, and with tax incentives going away [earlier], that domestic content goes away as well,” he said. “If I was financing a new cell plant, I’d be putting that back in my pocket and seeing how things play out.”
