Can the US break China’s grip on solar?

The primary building block for some 97% of the world’s solar panels is high-purity silicon, or polysilicon. (Image: Pixabay)
The primary building block for some 97% of the world’s solar panels is high-purity silicon, or polysilicon. (Image: Pixabay)


China controls the bulk of the world’s solar supply chain. Now, the US is trying to build its own. It will be tough.

China has come to dominate every step of the long, complex manufacturing process for solar panels.

Part of the reason for that dominance, built over two decades, is that the cost of everything from electricity to labor is much cheaper there than in places such as the U.S. or Europe. More recently, the massive scale of China’s solar-manufacturing operations has become an advantage, as it attracts talent, research money and ecosystems of suppliers.

Now, as demand for renewable energy explodes, the U.S. is trying to build its own solar-manufacturing supply chain almost from scratchand supporting the effort with sizable subsidies.

Here’s what that will entail, and why it is so tough to go up against China.

China cornered the polysilicon market

The primary building block for some 97% of the world’s solar panels is high-purity silicon, or polysilicon. In the U.S., that share is smaller because of the popularity of another type of panel made by spreading a thin film of chemicals on glass. Still, more than three-quarters of solar panels installed in the U.S. in 2022 were made from polysilicon.

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Making that silicon is the first big step in the solar manufacturing process. It is the most energy- and capital-intensive piece because of the high temperatures and expensive equipment used in refining.

Semiconductors are also made of silicon, purified to an even higher grade. But solar panels are much bigger than computer chips. And these days, the solar industry uses far more polysilicon than the chip industry.

Until around 2005, polysilicon manufacturing was dominated by companies from the U.S., Europe and Japan. With China’s huge expansion and investment into solar, that has flipped. In 2023, roughly 91% of the polysilicon for solar panels was produced in China.

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Everything is cheaper in China

China’s cost savings extend throughout the production process. The U.S. is trying to close the gap with big production incentives tied to each major stage of that process.

Manufacturers say those subsidies, offered through the Inflation Reduction Act in 2022, are for the first time making factories in the U.S. financially feasible. But not all parts of the supply chain qualify for support, and companies say that inflation and ballooning capital costs, combined with a crash in Chinese solar prices, are widening the cost gap again.


For years, Chinese polysilicon prices have driven prices in the rest of the solar supply chain. And those polysilicon prices have been on a roller-coaster ride as Chinese manufacturers went through cycles of boom and bust.

Recently, the U.S. has effectively banned the use of most Chinese polysilicon in imported solar panels because much of it is made in the western Chinese region of Xinjiang, where the U.S. has accused Chinese authorities of committing human-rights abuses including forced labor, allegations that Beijing denies.

Today, U.S. buyers are increasingly relying on solar panels that use polysilicon made outside of China. Those supplies are tight, and keep prices for the U.S. market higher than for other markets.

Ingots and wafers

In the next part of the process, the solar-grade silicon is melted in furnaces then cooled into big rod-shaped crystals called ingots. The ingots are sawed into thin slices called wafers.

China makes more than 97% of the world's solar ingots and wafers. The U.S. makes none.

Electricity costs

Ingot manufacturing is very energy-intensive due to the high temperatures used.

China has built many factories in areas with cheap power from coal or hydroelectric plants. The bulk of China's solar manufacturing is in provinces where electricity costs are nearly 30% below the global industrial average.


Furnaces, ingot growers, wafer cutters and diamond-encrusted wires are all needed to make silicon wafers.

Most of this equipment is made in China, making it more expensive for U.S. ingot and wafer manufacturers that don’t have many domestic suppliers.

Sand and other materials

High-quality quartz sand is used to produce special containers, called crucibles, for melting the silicon.

Most of the world's sand used in ingot production comes from the Appalachian mountains in North Carolina. But almost all of it is shipped straight to China, which makes the bulk of the world's crucibles.

Would-be crucible makers in the U.S. could have trouble getting sand. And would-be ingot and wafer makers in the U.S. will probably be buying the crucibles from China, bumping up costs.

Cell manufacturing

This is the stage at which the silicon becomes a device that can convert sunlight into electricity. There are many different ways of making solar cells, but in most, wafers are treated with chemicals and etched with circuits.

China controls around 80% of the solar-cell market, largely because of cost advantages, and because it controls other steps of the supply chain, which lets it build ecosystems of suppliers. Many Chinese cell manufacturers also produce wafers or panels.

The U.S. currently has no solar-cell manufacturers, with the last few pulling out of the country or going bankrupt within the past few years. Many companies have said they are planning to build solar-cell factories following the passage of the Inflation Reduction Act. More announcements are expected since it doesn’t require as much initial investment as silicon or wafer manufacturing.

Would-be crucible makers in the U.S. could have trouble getting sand. And would-be ingot and wafer makers in the U.S. will probably be buying the crucibles from China, bumping up costs.

Solar panels

Solar-panel manufacturing is effectively an assembly process. Companies take cells and line them between sheets of glass or another material, connect them with wires, laminate the whole thing and place it in a frame. Then wires and other electronics are added to connect the panels to each other and the larger electrical system.

This is the easiest and least capital-intensive piece of the solar supply chain, and the part that is most widely dispersed around the world. China accounted for 83% of the world’s solar-panel production and the U.S. less than 2% in 2023.

Labor costs

Salaries for everyone from engineers to factory workers are much lower in China than in the U.S. Factories in China also tend to run more shifts than in the U.S., raising productivity.

Because the U.S. doesn't have much solar manufacturing now, it needs to train much of its workforce from scratch. New factories could get delayed and take longer to ramp up than those in China.


Specialized glass is another big solar panel cost. Very little is currently made in the U.S.

Frames, wiring and other materials

The metal frame—in most cases made of aluminum—that goes around a solar panel is a significant part of the manufacturing cost. Another portion is the encapsulant, which covers the rows of cells to make sure everything stays in place. The U.S. makes very little of either right now.

Bottom line: China can make solar panels 44% cheaper than the U.S. can.

Write to Phred Dvorak at and Andrew Mollica at

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