Wacker copes with polysilicon headwinds better than its peers

German polysilicon manufacturer Wacker was able to improve its earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter, despite continuing market uncertainty about U.S. anti-dumping duties on solar module imports from Southeast Asia. By contrast, competitors OCI, Daqo New Energy and REC Silicon struggled with various, partly self-induced problems.

• OCI Malaysia renamed itself OCI TerraSus on February 5 to reflect its “ongoing commitment to innovation, sustainability, and our bright future in the industry.” It was an obvious act of greenwashing since the parent company OCI Holdings still conceals the heavy accident at the polysilicon plant of its Malaysian subsidiary with two fatalities in August 2024, as well as previous accidents and chemical dumping into the sea.
  The shutdown for repairing damages from the accident – sugarcoated as “maintenance” – was one of the reasons why OCI Malaysia’s operating income turned negative from KRW6 billion (US$4.43 million) in the third quarter to a loss of KRW27 billion (US$19.35 million) in the fourth; another reason was a loss from inventory valuation.
  Nevertheless, sales increased from KRW65 billion (US$47.9 million) in the previous quarter by 45% to KRW95 billion (US$68.1 million) because customers ordered more polysilicon to fulfill their long-term contracts. We estimate that the company’s EBITDA margin dropped from 27% in the third quarter to approx. -16% in the fourth. In the first quarter of 2025, OCI’s polysilicon plant has returned to normal operations.
• Wacker, by contrast, displayed a positive earnings trend: The EBITDA margin of its polysilicon division rose from 14.0% in the third quarter to 31.4% in the fourth. This result, however, includes a EUR30.7 million (US$32 million) benefit from the production tax credits under the U.S. Inflation Reduction Act, for polysilicon produced and sold by Wacker’s U.S. polysilicon plant in 2023 and 2024.
  But even without this benefit, the division’s EBITDA margin grew slightly to 16.7% although Wacker reduced the utilization rate of its polysilicon plants to 66% in the fourth quarter. That was due to the continuing market uncertainty about the final anti-dumping and countervailing duty rates for solar module imports from Cambodia, Malaysia, Thailand and Vietnam into the United States. The final decision is expected in April and the confirmation by the U.S. International Trade Commission in June.
  Wacker’s good results in the fourth quarter were obviously supported by an increasing share of higher-margin, electronic-grade polysilicon for semiconductors in the company’s product mix. Depending on the scope of recovery in the solar sector, Wacker’s scenarios for 2025 range widely from an annual EBITDA margin of 10% up to 19%, compared to 20.4% in 2024.
• Daqo New Energy was again hit by the low price level in China. The company’s negative EBITDA margin slumped from -17.3% in the third quarter to -121.1% in the fourth. As in the second quarter, Daqo’s results were impacted by a huge impairment charge of US$175.6 million, this time related to its older production lines. Although China’s third largest polysilicon manufacturer was able to drive down its cash costs significantly from US$5.34/kg in the previous quarter to $5.04/kg, its average selling price was still lower at $4.62/kg.
  After Daqo’s output fell below its sales volume in the fourth quarter, its inventory volume decreased to less than 20,000 metric tons (MT) by the end of February. Obviously influenced by the self-discipline agreement closed by the Chinese solar industry in December, the company is planning an output of only 110,000 MT to 140,000 MT for the full year of 2025. Based on an effective annual production capacity of 350,000 MT, this volume corresponds to a utilization rate of only 31.4% to 40%.
• REC Silicon has ended up in a disaster with the upgrade project for its monosilane-based fluidized-bed reactor (FBR) plant in Moses Lake in the U.S. state of Washington. On December 30, the company announced that it is ceasing production at its facility in Moses Lake after it was unsuccessful in its attempts to solve the impurity issues with its granular polysilicon, mainly arising from the product finishing and handling systems.
  Consequently, its only customer Hanwha was “not able to wait any longer for delivery of product that consistently meets the requirements at the correct [purity] levels,” REC Silicon said. One of its employees commented on Facebook that the company had problems with a fluctuating purity level and ran out of money and time to do more research and development.
  As a result, REC Silicon’s EBITDA loss from total operations widened to US$56.5 million in the fourth quarter. With revenues of US$30 million, the negative EBITDA margin fell from -126.4% in the third quarter to -188.3% in the fourth. Due to an impairment of US$246 million in the Solar Materials segment (Moses Lake) and other depreciation, the EBIT loss amounted to US$306.8 million in the fourth quarter.
  REC Silicon has hidden these numbers on page 31 of its 35-page quarterly report; in the investor presentation of its quarterly results, it highlighted the figures from continued operations. While the Semiconductor Materials segment in Butte, Montana contributed a positive EBITDA of $2.6 million, the category “Other” (mainly overhead) caused an EBITDA loss of $7.9 million. Hence, even the EBITDA margin from continued operations was negative at -17.7%.
  Not only, but also because of the disaster in Moses Lake, REC Silicon has now accumulated a nominal net debt load of $407.8 million, most of which will mature in 2026. Without significant capital infusion or disposal of assets, the company will become insolvent. It will be challenging to find enough new investors and/or lenders who will bet on REC Silicon’s new focus on silicon gases. As the company has terminated the production of polysilicon, we will discontinue our coverage of its quarterly results.