Trump's Polysilicon Trade Policy Threatens Tennessee Chip-Material Plant, Sources Say

A Tennessee factory central to U.S. efforts to secure the semiconductor supply chain is at risk of closure after a new Trump administration trade policy drove away its last two customers, according to sources familiar with the matter. The development represents a potential backfire for a policy designed to bolster domestic production of critical materials.

Plant Closure Looms

Germany’s Wacker Chemie will decide in the coming weeks whether to shut down its Charleston, Tennessee, facility, which employs approximately 600 workers, the sources said. The plant produces polysilicon, a key material for both semiconductor chips and solar panels.

The potential closure follows a White House proclamation on August 6 that, according to the sources, prompted the facility's two remaining customers to leave. Wacker did not comment on the customer losses but stated the policy "does not, as it reads now, effectively support the use of U.S. made polysilicon." The company confirmed it is in discussions with the administration to achieve the policy's goals.

Unintended Consequences of New Tariffs

The trade measures include a price floor and tariffs on imported polysilicon ingots, wafers, and solar panels. However, the rules apply equally to products made abroad regardless of the polysilicon's origin, treating U.S. and Chinese material the same.

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This structure fails to offset the core disadvantage for domestic producers. American-made polysilicon can cost up to four times more than foreign alternatives, according to market research firm Bernreuter Research. "We don’t expect the Section 232 tariffs, as currently structured, to boost demand for U.S. polysilicon," said Elissa Pierce, a research analyst at Wood Mackenzie.

Broader Supply Chain Implications

This situation echoes previous Trump administration trade actions, such as steel and aluminum tariffs that initially raised costs for U.S. automakers. It raises questions about the effectiveness of policies aimed at reshoring critical manufacturing and countering China's growing dominance in the semiconductor sector.

The Coalition for a Prosperous America, an advocacy group, warned of the risks. "Without a clear signal that domestic polysilicon will be the foundation of both the solar and semiconductor supply chains, we risk ceding both to foreign competitors and adversarial nations like China," said spokesperson Nick Iacovella.

Wacker Chemie’s Charleston plant, a $2.5 billion investment, has faced intense pressure from Chinese competition. Days before the new policy was announced, Wacker CEO Christian Hartel warned investors that without beneficial trade action, the company could have "one plant too many."