Why wafers are the Achilles’ heel of a non-Chinese supply chain

The USA, the European Union (EU) and India are all striving for reshoring a complete solar supply chain to reduce the dependence on China. While there is hardly any lack of projects to produce solar cells and modules in those three world regions, initiatives for new ingot and wafer plants are rare.

By Johannes Bernreuter

No other link of the photovoltaic (PV) supply chain is more dominated by China than the production of silicon ingots and solar wafers. Including Chinese factories in Southeast Asia (mainly Vietnam), China accounted for more than 99% of the global wafer output in 2023.

A survey presented by Bernreuter Research at the workshop on crystalline silicon materials for PV (cSiMATPV) in Constance (Germany) on May 16 shows that this situation will not change in the short term: While Chinese manufacturers are planning to increase their wafer capacities (including those in Southeast Asia) from around 1,100 GW at the end of 2023 to over 1,350 GW by the end of 2024, non-Chinese wafer capacities will grow to little more than 12 GW in the same time frame (see chart above; no claim for completeness). That’s still a non-Chinese share of less than 1%.

The massive Chinese wafer overcapacity and the attempt of producers to keep utilization rates high in order to avoid rising manufacturing costs has led to wafer inventories of approx. 38 GW, record-low prices and production at a loss. This has already forced CubicPV to scrap its 10 GW wafer project in the United States.

Bottleneck at western equipment manufacturers

The cSiMATPV workshop, organized by the International Solar Energy Research Center, highlighted another problem: Although western equipment manufacturers like ECM Greentech and PVA Tepla (crystal pullers for monocrystalline ingots) and Lapmaster Wolters (wire saw business inherited from Meyer Burger) are working on a re-entry into the solar sector, from which they were pushed out by low-cost Chinese competition more than a decade ago, they will not reach the capacities to fully support the EU target of a domestic content of 40% in annual PV installations of approx. 100 GW (cumulative installations of 750 GW) by 2030.

Moreover, annual PV installations of 100 GW in the EU will already be exceeded in 2025. For 2030, Bernreuter Research expects new EU installations in the order of 400 GW. A domestic production volume of 40 GW would then be equivalent to a share of only 10%.

Hence, ingot and wafer production will remain the Achilles’ heel of a non-Chinese supply chain. Western ingot and wafer manufacturers will continue to depend on equipment from Chinese suppliers. While the Chinese Ministry of Commerce included manufacturing technology for PV silicon wafers in the draft of its new export restrictions catalog in January 2023, this item has been removed from the final version published in December 2023. Nicole Qian from Zhejiang Jingsheng Mechanical & Electrical Co., Ltd. (JSG), the world’s largest solar equipment maker, signaled at the cSiMATPV workshop that her company would be willing to cooperate with western manufacturers.

Johannes Bernreuter is Head of Bernreuter Research and author of the Who’s Who of Solar Silicon Production series (2010/2012/2014) and the Polysilicon Market Outlook series (2016/2020/2023). Bernreuter’s latest report covers the polysilicon, solar and semiconductor markets through 2027.