US CHIPS Act Boost: Hanwha Q Cells and OCI Set to Reap Rewards from Expanded Subsidies

South Korean Solar Cell Companies to Benefit from Expanded US Subsidies

South Korean solar cell companies, such as Hanwha Q Cells Co. and OCI Holdings Co., are set to benefit from expanded subsidies covered by the CHIPS and US Science Act.

According to industry sources, the US Treasury plans to implement the revised CHIPS Act on December 23, offering subsidies to solar cell companies to cover 25% of the cost of setting up solar ingot and wafer factories in the country.

Under the revised law, Korean solar companies operating in the US market are now eligible for additional subsidies of up to hundreds of billions of won, or hundreds of millions of dollars, industry officials said.

This comes as the US government decided to expand the scope of the CHIPS Act, originally intended to subsidize semiconductor plants, to solar ingots and wafers.

Hanwha Q Cells, a unit of Korean chemicals-for-construction conglomerate Hanwha Group, is expected to start operating its ingot and wafer plants, each with a capacity of 3.3 GW, in Cartersville, Georgia, by mid-2025.

Hanwha Q Cells, known as Qcells in overseas markets, is expected to receive tax credits for its investment costs once the plants start operating.

The company operates another solar cell factory in Dalton, Georgia, making it the largest manufacturer of silicon solar modules in the United States.

OCI Holdings, which also plans to build ingot and wafer plants in the United States, is expected to gain additional tax benefits.

The CHIPS Act and US Solar Industry

The CHIPS Act, introduced in 2022 by the Biden administration, provides subsidies across the semiconductor value chain for facilities established in the country.

In response to the influx of low-cost Chinese solar products dominating the US energy market, the US government has decided to expand the scope of the Act’s subsidy to the solar sector.

Considering that an ingot factory requires an investment of about 220 billion to 250 billion won ($160 million – $181 million) per GW and that a wafer factory requires 180 billion to 220 billion won, Hanwha Q Cells is likely to spend between 1.32 trillion won and 1.55 trillion won ($957 million-$1.1 billion) in total for its ingots and wafer plants in Cartersville.

Considering the costs, Hanwha Q Cells, owned by Hanwha Solutions Corp., could receive about 330 billion to 390 billion won in subsidies.

The company has already been receiving an advanced manufacturing production credit (AMPC) under the Inflation Reduction Act (IRA), which aims to support the renewable energy industry in the United States.

“Barring any significant changes, we expect to be eligible for CHIPS Act subsidies,” said a Hanwha Q Cells official.

However, the outcome of the US presidential election could be variable.

If former President Donald Trump, the Republican candidate who opposes the use of government money for foreign chip companies such as Samsung Electronics Co and Taiwan Semiconductor Manufacturing Co (TSMC), wins the race, the policy could change, say industry watchers.