How Hanwha sabotaged REC Silicon’s granular-polysilicon plant

Hanwha has acquired a majority share in U.S.-based silane and former polysilicon manufacturer REC Silicon at a fraction of its original value. Court documents fuel suspicion that the South Korean conglomerate has followed the script for a corporate raid at the takeover.

By Johannes Bernreuter, Head of Bernreuter Research

In a stock exchange notice on September 13, 2024, REC Silicon stroke an upbeat note. The U.S.-based polysilicon and silane manufacturer reported about the ongoing upgrade of its fluidized-bed reactor plant in Moses Lake in Washington state, where it had installed new equipment to produce highly pure polysilicon granules for n-type solar cells.

REC Silicon said: “The Company is pleased to announce that following a series of modifications and mitigations in our process aimed at addressing a previously announced issue around higher than expected levels of an impurity in the product, all impurities have now been reduced to levels that are acceptable to our customer, and we have an agreement in principle to modify a specification subject to a final evaluation and qualification test, as is typical in the industry after such a modification.”

The disillusionment followed three months later. After REC Silicon’s product sample had been held up at Chinese customs for several weeks, the company’s sole customer Hanwha Qcells, a subsidiary of the South Korean Hanwha Group, had an unknown third party in China perform the qualification test. On December 17, REC Silicon disclosed that “the customer deemed the test to be unsuccessful. This was due to lower-than-expected levels of crystallization and the ingot yield observed in the testing runs, which the customer deemed not to be acceptable for their production process at this stage.”

The final blow came on December 30 when REC Silicon announced that it was ceasing production at its plant in Moses Lake because “the customer is not able to wait any longer for delivery of product that consistently meets the requirements at the correct levels” – although the new ingot and wafer production facility of Qcells in Cartersville, Georgia was expected to open as late as mid-2025 and its start-up has now been delayed to 2026.

A share price offer at 11% of the value Hanwha paid three years earlier

Just three days after REC Silicon’s announcement, Qcells mentioned in a comment on LinkedIn that its parent company Hanwha Solutions had signed a long-term supply contract with polysilicon manufacturer OCI. Qcells and REC Silicon terminated their exclusive, ten-year polysilicon supply contract on January 24.

Unsurprisingly, the disaster sent the public stock price of the Norwegian parent company REC Silicon ASA south. In mid-August 2022, three months after Hanwha Group’s subsidiaries Hanwha Solutions and Hanwha Corporation had acquired a combined stake of 33% in REC Silicon at a share price of 20 Norwegian Kroners (NOK), the stock price still was at a high of NOK24.50. By early May 2024, however, it already slid to NOK10. In November it approached NOK4 before it reached a low of NOK1.06 in mid-March 2025.

On April 24, REC Silicon announced an offer by Anchor AS, a newly established Norwegian subsidiary of Hanwha Global Americas Corporation, to acquire all issued and outstanding shares in REC Silicon ASA at an offer price of NOK2.20 per share – 11% of the price Hanwha paid in 2022 – and to take the company private through delisting from the Oslo Stock Exchange – the opposite of what Hanwha had indicated before.

Although Hanwha menaced to stop financing its highly indebted and cash-strapped acquisition target, captivated REC Silicon’s board of directors with an oppressive “Transaction Agreement” and threatened legal action against members of the board, Anchor AS was only able to secure 60.19% of all outstanding shares after two offers by August 29.

Hanwha’s strategy resembles that of a corporate raider

Already on December 31, the day after REC Silicon announced the shutdown of the Moses Lake plant, the author of this article asked two questions in a post on LinkedIn: “Has REC Silicon been taken hostage by its shareholder Hanwha?” And: “Are we just watching an economic whodunit?” Court documents now suggest that the answer to both questions is “yes.”

Water Street Capital, Inc., a Florida-based investment firm and – with a share of 8.26% – the second largest shareholder in REC Silicon, is preparing civil proceedings in Norway against Hanwha “for issuing a tender offer that contains material errors or omissions” and against certain members of REC Silicon’s Hanwha-dominated board of directors “for breaches of informational duties to the stock market.”

Water Street sees evidence that “Hanwha is conspiring to defraud REC Silicon’s other shareholders by sabotaging and mismanaging the Moses Lake plant, terminating its experienced employees, continuously changing production procedures and intentionally causing REC Silicon to fail a crucial test of its product’s quality as a pretext to terminate a 10-year supply contract.” The target of the scheme, so Water Street, was to purchase the remainder of REC Silicon “for pennies on the dollar.”

In short: Water Street blames Hanwha to act like a corporate raider.

The offer price of NOK2.20 per share for REC Silicon implies an equity value of NOK925 million (approx. US$92 million), whereas Water Street estimates the value of the plant in Moses Lake alone at more than US$1 billion. “The fluid-bed reactors at the Moses Lake facility can be restarted at any time to produce consistently pure polysilicon” and “the silane gas produced at the facility can be used in the production of lithium-ion batteries that power electric vehicles,” argues the investment firm in an application at the U.S. district court of Eastern Washington for an order to obtain evidence from REC Silicon, in support of the prospective lawsuit in Norway.

On the other hand, REC Silicon’s net debt amounted to US$447.3 million at the end of June 2025. In the first half of 2025, the company made a loss of US$23.7 million from continuing operations (its second plant in Butte, Montana and overhead) and an additional US$8 million from discontinued operations. To stay afloat, REC Silicon needs further cash.

Hanwha behaved as if it was already the owner of REC Silicon

Water Street’s accusation of sabotage against Hanwha is corroborated by information from former REC Silicon staff whom investigators interviewed on behalf of Water Street’s legal counsel. In their statements, seven confidential ex-employees – experienced workers as well as high-level managers – draw a picture that displays minority shareholder Hanwha acting as if it was the owner of REC Silicon. The witness statements can be clustered into four thematic blocks:

• Presence of Hanwha personnel: Hanwha deployed about fifteen employees to oversee operations at the Moses Lake plant. Every project manager at REC Silicon was assigned a Hanwha counterpart who occupied adjacent offices and required detailed project reports. Personnel from Hanwha initially came to the plant to observe operations. However, after a period of time, these individuals eventually became omnipresent and dictated directions. Hanwha personnel frequently bypassed REC Silicon supervisors and issued direct orders to workers. Hanwha assumed operational control about six to eight months before shutting down the plant; the head of operations started to report to Hanwha personnel.
  Editor’s note: Already in October and November 2022, Hanwha installed Jeong Ryul (“Jack”) Yun as Chief Financial Officer, Dongjin (“Dylan”) Jung as Chief Strategy Officer, and Jaesung (“Jackson”) Sim as project management officer (promoted to Senior Vice President for “Operational Excellence” in February 2024) at REC Silicon. All three Koreans had previously pursued long-time management careers within the Hanwha Group.
• Operational control: Hanwha personnel assumed operational control of the plant even though they were not subject matter experts. Hanwha’s team eventually controlled critical operational decisions. Hanwha employees interfered with line operations and processes on a daily basis. Hanwha engineers constantly changed the production processes, frequently changed the production equipment, installed new equipment, and switched equipment configurations across several lines. Hanwha personnel prevented REC Silicon staff from hitting their goals by changing flow patterns, altering testing protocols, and generally interfering with operations. Hanwha visitors interrupted modifications that were proven to work before and prevented REC Silicon from establishing stable, optimized processes.
• Product purity: The Moses Lake plant had achieved the desired quality levels for polysilicon purity, and the results were moving in the direction of becoming consistent. However, Hanwha personnel overhauled the plant’s packaging process. For example, the facility was forced to switch to using bags that were contamination-prone and generated additional dust. When the Moses Lake team met certain quality targets, the Hanwha personnel would introduce new testing methods without comparative data. Each time the workers achieved the required purity levels, Hanwha imposed new and stricter specifications; this pattern continued until the shutdown. The polysilicon sample that Hanwha sent for testing had failed the quality test because it was shipped without annealing, a necessary process to remove hydrogen impurities. The lack of annealing all but ensured that the test would fail. In the final three months before closure, analytical results showed that the products met metal specifications. The Moses Lake plant was making the purest polysilicon in the world.
• Hanwha’s strategy: Hanwha’s goalposts kept moving, so the Moses Lake facility team was never able to hit these moving targets. It was apparent that Hanwha wanted to get out of the 10-year contract. The timing of the contract Hanwha announced with OCI just days after Hanwha abandoned the polysilicon purchase agreement suggested premeditation. Hanwha’s actions were part of a coordinated campaign to destabilize REC Silicon’s operations and financial position.

Solar modules from Qcells are now tainted twofold

Of course, Hanwha has claimed in its defense at court that it did not sabotage or harm REC Silicon. On this point, however, the witness statements are very clear and detailed. It is unlikely that seven ex-employees have been grievously mistaken in what they observed with their own eyes.

By contrast, their statements on product purity have to be taken with a grain of salt. The bold claim that the Moses Lake plant “was making the purest polysilicon in the world” is completely over the top. Perhaps, this may be true for polysilicon granules, but definitely not for polysilicon in general: Search for any batch of granules that is purer than the best polysilicon chunks from the dominant Siemens process – you will not find it.

Jacob Imel, also an employee at REC Silicon, has provided an assessment that differs somewhat from the witness statements. On the Facebook page of the local newspaper Source ONE News, he wrote shortly after the shutdown of the Moses Lake plant:“Our quality has increased tenfold since we sent the qualification pallets to China. But even though the quality has increased so much, we were having issues with keeping it consistently at high purity. It’s still a high purity product but the fluctuation is what the customer was worried about. We had a bunch more testing and trial runs scheduled for January but (…) we just ran out of money and ran out of time. The customer needs its product now and at a consistent level, and we couldn’t provide that without more R&D.”

In any case, Hanwha has not only caused harm to REC Silicon’s retail shareholders and employees; it has also damaged its own reputation – be it through a greedy corporate raid or through mismanagement based on incompetence. Solar modules from Hanwha Qcells are now tainted twofold: by Qcells’ parent company that embodies anything but good governance, and by its polysilicon supplier – OCI TerraSus in Malaysia – that lacks any safety culture and severely pollutes the environment.

Update: Norwegian court dismisses shareholder request for an investigation

On October 15, REC Silicon announced that the Asker and Bærum District Court in Norway has ruled to dismiss the shareholder request made in July 2025 for an investigation of the case.