Wacker weighs closing Tennessee polysilicon plant after Trump tariffs, Reuters reports

A German chemicals company is considering closing the American plant that Washington’s new polysilicon tariffs were supposed to protect.

Wacker Chemie has lost its last two customers for the material since the measures were announced and is weighing the future of a factory in Charleston, Tennessee, that employs about 600 people, Reuters reported in an exclusive.

Polysilicon is the raw material for both solar panels and semiconductors. Only two companies still make it in the United States, Wacker and Hemlock Semiconductor, after domestic production fell from about half of global output in 2005 to under 2% by 2024.

The White House proclamation of 6 August was written to reverse that. It set a 15% duty on most imported polysilicon and derivatives along with price floors of $21 a kilogram for polysilicon and $100 for ingots and wafers, taking effect in December.

The problem is where the measures land. They apply to ingots, wafers, cells and panels regardless of whether the polysilicon inside them was made in America, so a US producer gains nothing while its customers pay more.

Wacker has said as much. The proclamation “does not, as it reads now, effectively support the use of US-made polysilicon, “ the company said.

The underlying arithmetic has not changed. American polysilicon costs roughly four times what Chinese material costs, and a tariff that raises the price of everything downstream does not close that gap.

Christian Hartel had signalled the risk before this. Wacker’s chief executive warned the company could find itself with “one plant too many” without trade action that actually helped.

The national security case for the policy was specific. Chips built on polysilicon go into defence systems, which is the argument the administration used for intervening in a market it had previously left to Chinese producers.

Wacker’s customers are the ones the price floors reach first. A wafer maker buying American polysilicon at four times the Chinese price, then paying a floor on the wafers it sells, has every reason to source the finished product from somewhere the floors bite less.

Losing Wacker’s Tennessee output would leave one American producer. That is a thinner supply chain than the one the proclamation was written to protect, achieved by a policy designed to thicken it.

It is also a familiar pattern with these instruments. A tariff aimed at a foreign competitor lands on the domestic customers who buy from that competitor, and the domestic supplier only benefits if the measure distinguishes between the two.

The Tennessee plant is European-owned, which complicates the politics. Wacker is a German company that built manufacturing in America, exactly the behaviour the administration says it wants, and it is the one now considering an exit.

Chinese producers are moving up the value chain meanwhile. They already dominate solar-grade polysilicon and are expanding into the semiconductor-grade material, which is the part with defence applications.

Europe is watching the same dependency from the other side. The EU has been drawing up its own plans for the clean tech race while stockpiling €7bn of Chinese solar panels, which is a candid assessment of how far the alternative supply actually extends.

The chip tariffs have been imprecise elsewhere too. TNW has set out what the US semiconductor tariff does and does not currently touch, and the boundaries have moved more than once.

December is the date that matters. The measures do not bite until then, which leaves a window in which the drafting could be changed, and a plant that has already lost its customers could find them again.

Nothing is settled yet. No closure has been announced, and the administration could still amend the proclamation to distinguish American polysilicon from imported material, which is the change Wacker is asking for.