Major polysilicon producer Hemlock Semiconductor has cited unresolved trade disputes, notably with China, as a key factor behind the decision to lay off approximately 400 employees, while reducing polysilicon production and delaying the ramp of its new plant in Tennessee.
“This is a difficult but necessary decision to enable Hemlock Semiconductor to navigate the volatility in the polysilicon and solar industries,” said Andrew Tometich, President of Hemlock Semiconductor. “The unresolved trade disputes among the US, China and Europe are a major factor in Hemlock Semiconductor’s actions as the threat of tariffs on U.,S polysilicon imported into China has significantly decreased orders from China, which is home to one of the largest markets for our products.”
China is currently investigating claims made by its polysilicon producers that foreign suppliers were selling the high-purity material below cost, which had resulted in prices plummeting and 90% of producers in China halting production.
However, recent reports have highlighted the significant overcapacity in the polysilicon sector, which was driven by massive capacity expansions since 2008 and included over 100 new producers, primarily in China, entering the market.
Major producers such as Hemlock and Wacker had also initiated facility upgrades to produce and meet growing demand as well as start major new facility investments several years ago.
Hemlock said that lay offs would affect 300 employees at its Tennessee site, which has yet to be commissioned and start production and 100 jobs would be lost at its major production site in Michigan.
The company plans to reduce production capacity, though did not provide details regarding metric ton quantities. Hemlock was on target to boost production to around 46,000MT per annum, up from 12,300MT in 2008. The new plant was to come on stream in 2013.
Hemlock said that the Tennessee site was effectively being put on hold, pending market conditions and the resolution of the trade disputes.
“Hemlock Semiconductor has been in business for 52 years and remains a leading player in its industry. As one of the industry leaders we will manage through this period of extreme volatility and uncertainty and will emerge as a group of companies that will remain viable for the long-term,” added Tometich.