Polysilicon, an ultra-pure form of silicon, sits at the start of the semiconductor and solar manufacturing supply chains. Manufacturers turn silicon wafers into solar cells and then assemble those into panels used in solar projects.
Domestic semiconductor manufacturing, a Trump priority, depends on solar because the solar industry's larger demand for polysilicon helps support production of the material required for chips. The chip industry accounts for 2.4% of global polysilicon demand, the Semiconductor Industry Association said.
“They're finding that they actually do need solar,” said Rhone Resch, chief strategy officer at Japan's Toyo Co Ltd, which operates a solar panel factory near Houston and plans to invest $357 million in a nearby solar cell facility.
Two of the sources said the Commerce plan will allow importers investing in U.S. wafer and cell production to offset the costs associated with the trade protections. China accounts for roughly 80% of global solar manufacturing capacity.
Under the Cold War-era Section 232 statute, the president can restrict imports deemed a threat to national security after an investigation to confirm a threat exists.
Trump has already completed probes and imposed tariffs on autos, steel, aluminum, copper and lumber. He is expected to soon release the findings of similar investigations into imported drones and industrial robots, which would clear the way for tariffs on those goods.
The administration is also continuing work on closely watched probes into semiconductors, pharmaceuticals, critical minerals and wind turbines as it seeks to rebuild its global tariff regime.
U.S. solar manufacturing has expanded since Congress created tax incentives in 2022. Much of that growth, however, has been concentrated in panel assembly, leaving manufacturers dependent on imported wafers and cells, which require longer investment timelines.
Several U.S. solar factory owners, including Toyo, Qcells, Corning, Canadian Solar and T1 Energy, have announced or started facilities farther up the solar supply chain in part to meet stringent Made-in-America requirements tied to federal clean energy subsidies.
The trade group Solar Energy Manufacturers for America and a bipartisan group of U.S. lawmakers have argued in comments to the Commerce Department that imports from non-Chinese producers like South Korea's OCI Holdings and Wacker, with factories in Malaysia and Germany, will be needed until domestic polysilicon, wafer and cell production expands.
Hemlock, which operates a plant in Michigan, is a joint venture between Corning and Japan's Shin-Etsu Handotai. Munich-based Wacker runs a factory in Tennessee.
“Without polysilicon, the next steps of the value chain (wafer and chips or wafer and solar cells) are not possible,” Wacker said in a statement.
Corning declined to comment.
The administration must walk a fine line between supporting domestic producers and inflating the cost of chips and solar panels, products in high demand amid the data center boom.
Industry groups representing solar developers and semiconductor buyers have warned the administration that tariffs could raise the cost of solar power plants and increase prices for products including consumer electronics and automobiles.
Even some manufacturers are worried about the impact on demand for their products.
“The market might start having projects fall down” if costs become too high, Martin Pochtaruk, CEO of panel maker Heliene, which operates factories in Minnesota, said in an interview. He called the solar industry's role in the chip-focused trade investigation “collateral damage.”
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