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'Flood of imports' threatens First Solar after Trump tariff exemption, CEO says

A recent U.S. Trade Representative decision to grant so-called bifacial solar panels an exemption from President Donald Trump's tariffs on imported photovoltaic cells and modules runs counter to the president's trade policies by reopening the floodgates to inexpensive foreign-made products and jeopardizes domestic manufacturers, First Solar Inc. CEO Mark Widmar said Aug. 1.

"The spirit of what was put in place [in January 2018] was to allow companies to scale and to ramp manufacturing and to enhance overall cost competitiveness to deal with imported competitors," Widmar said on the company's second-quarter earnings call with investment analysts. That decision to place 30% tariffs on solar cell and module imports, combined with the Trump administration's sweeping corporate tax reform, led First Solar to invest $400 million into a new factory in Ohio to produce its next generation of thin-film solar panels, known as Series 6.

SNL Image

Bifacial solar panels, such as this one from Canadian Solar,
are now exempted from U.S. trade tariffs.
Source: S&P Global Market Intelligence

First Solar had hoped it would be able to expand domestically "in an environment that wouldn't be under siege by a flood of imports." Instead, the company is now facing added risk "unless there's some form of modification to it or either rescission or some of quota," the CEO said.

The president's trade office in a June 13 decision granted a pass to bifacial modules, which absorb sunlight on both sides. Ahead of the move, several of First Solar's foreign competitors, including Canadian Solar Inc., JinkoSolar Holding Co. Ltd., LONGi Green Energy Technology Co. Ltd. and Trina Solar Ltd., made big bets on the technology.

Canadian Solar, for instance, a Canada-headquartered company with manufacturing largely in China, in May signed the largest module supply deal in its history with a North American affiliate of EDF Group, which includes bifacial modules for U.S. projects. LONGi is supplying its modules for a 160-MW solar farm in Georgia that started construction in March, touted as "America's largest bifacial solar project to date."

Overall, U.S. imports of solar panels jumped in the second quarter of 2019, according to data from Panjiva.

First Solar, however, is able to "contract through this headwind," according to the CEO, noting the company's record shipments in the second quarter.

"I don't have any concern around our ability to compete with a bifacial module," Widmar said. The "bigger challenge," he added, is that the exemption "compromises economics" and "what we capture relative to our competition."

For the second quarter of 2019, First Solar posted a net loss of 18 cents per share, reducing its 46-cent-per-share net loss a year ago but missing analysts expectations. First Solar boosted its net sales in the second quarter 89% to $585 million. The company expects to ship 5,400 MW to 5,600 MW in 2019 and generate earnings of $2.25 to $2.75 per share.

Panjiva is a business line of S&P Global Market Intelligence, a division of S&P Global Inc.