China didn’t steal their leadership in solar manufacturing, or stumble into it by luck.
They saw that some American inventions held the key to the future, and they made it happen.
A big part of this story took place just down the road from me…
To make the solar cells that are projected to become the world’s biggest source of electricity by 2031, you first melt down sand until it looks like chunks of graphite. Next, you refine it until impurities have been reduced to just one atom out of every 100 million — a form of elemental silicon known as polysilicon. It’s so vital to the production of solar panels that it can be likened to crude oil’s role in making gasoline. The polysilicon is then drawn out into a vast crystal, resembling a Jeff Koons steel sculpture of a sausage, before being sliced into salami-thin wafers. These are then treated, printed with electrodes, and finally sandwiched between glass.
The basic process has changed little since the first cell was invented in 1954 by scientists at Bell Laboratories in New Jersey exploring whether silicon could be used to power computer processors. “It may mark the beginning of a new era,” The New York Times wrote at the time in a front-page article announcing the discovery, “leading eventually to the realization of one of mankind’s most cherished dreams — the harnessing of the almost limitless energy of the sun for the uses of civilization.”
The seven decades since tell the remarkable story of how America squandered its invention of solar photovoltaics, or PV, to the point where it will never recover. As recently as 2010, a small town in central Michigan was the world’s biggest producer of solar polysilicon. Nowadays, the US is barely in the game, and more than 90% of the total comes from China. That country’s clean-technology exports “threaten to significantly harm American workers, businesses and communities,” President Joe Biden said May 14, announcing 50% tariffs on Chinese solar cells.
Washington blames China’s dominance of the solar industry on what are routinely dubbed “unfair trade practices.” But that’s just a comforting myth. China’s edge doesn’t come from a conspiratorial plot hatched by an authoritarian government. It hasn’t been driven by state-owned manufacturers, subsidized loans to factories, tariffs on imported modules or theft of foreign technological expertise. Instead, it’s come from private businesses convinced of a bright future, investing aggressively and luring global talent to a booming industry — exactly the entrepreneurial mix that made the US an industrial powerhouse.
The fall of America as a solar superpower is a tragedy of errors where myopic corporate leadership, timid financing, oligopolistic complacency and policy chaos allowed the US and Europe to neglect their own clean-tech industries. That left a yawning gap that was filled by Chinese start-ups, sprouting like saplings in a forest clearing. If rich democracies are playing to win the clean technology revolution, they need to learn the lessons of what went wrong, rather than just comfort themselves with fairy tales.
To understand what happened, I visited two places: Hemlock, Michigan, a tiny community of 1,408 people that used to produce about one-quarter of the world’s PV-grade polysilicon, and Leshan, China, which is now home to some of the world’s biggest polysilicon factories. The similarities and differences between the towns tell the story of how the US won the 20th century’s technological battle — and how it risks losing its way in the decades ahead.
If you own a mobile phone, a computer, a car, or a home appliance, it’s likely there’s a little bit of Hemlock in your home right now. Hemlock Semiconductor Corp. produces about one-third of the world’s chip-grade polysilicon, which finds its way into almost every electronic device on the planet. Solar polysilicon is simply the poor cousin of the stuff computer chips are made from: While impurities of one part in 100 million are considered acceptable for solar panels, microprocessors need to be pure to as much as one part in 10 trillion.
The constant stream of chemical tanker trucks going to and from the plant is the only sign that a vital node of the global economy is hidden among Hemlock’s soybean, corn and blueberry fields, dotted with red barns, clapboard homes and flagpoles. Two hours north of Detroit and inland from Lake Huron, its main street hosts a discount store, a coin-op laundry, a Ford dealership, a vet clinic, a handful of liquor stores and chain restaurants, a tavern and very little else.
It’s about as close to Middle America as you can get. Former President Donald Trump won surrounding Saginaw County, long a Democratic stronghold, by 1,074 votes in the 2016 presidential election. Four years later, Biden took it back on a margin of 303. Hemlock is part of Michigan’s 8th Congressional District, the pivot point of the entire US House of Representatives. Currently, exactly 217 seats are more Democrat-leaning, and 217 more Republican-leaning.
Hemlock Semiconductor keeps a low profile in this rural area. Driving past stands of the hemlock pines that give the town its name, you’re almost at the gate of the roughly 800-acre (three-square-kilometer) site before you notice its distillation towers, warehouses and a low industrial hum. The company turned down Bloomberg’s requests to visit the facility or interview executives.
People in town appreciate the semiconductor factory as a provider of more than 1,300 jobs, alongside funding for the town fair and school board — even if it’s always been a bit opaque. Katherine Ellison, a local historian, grew up in the 1980s two roads across from the plant, nicknamed “The City in the Woods” by her friends. “You’d kind of stumble upon this huge, lit-up structure at night,” she told me. “People who weren’t from here would ask, “What is that?”
Operations started long before solar power was taken seriously. The year was 1961, a time when the founders of Intel Corp. were looking at using polysilicon to build the first integrated circuits for use in the Apollo space program. That seemed an ideal business for Dow Corning, a long-standing joint venture between Dow Chemical Co. and Corning Inc. specializing in silicon-based chemicals such as glues, sealants and breast implants.Dow had established itself in the 1890s in nearby Midland to take advantage of rich underground deposits of brine that could be refined into useful chemicals. The trains rattling back and forth there upset the delicate polysilicon purification process, so a new plant was established on isolated farmland in Hemlock, 14 miles (22.5 kilometers) to the south.
It’s never been an easy business. Moore’s Law — the celebrated rule of innovation that turned computers from room-sized, costly devices in the 1950s into affordable microchips that can sit on a fingertip — also required constant reductions in the costs and volumes of polysilicon in use, making it hard for companies to make consistent profits. “The purer it is, the less you need,” Denise Beachy, Hemlock’s president from 2014 to 2016, told me.
As far back as 1984, a study for the US Department of Energy noted that Hemlock was “an old, high-cost plant” where Dow Corning was “reluctant to invest.” With the venture unwilling to spend money, fresh capital was brought in the same year by selling about one-third of the factory’s equity to Japan’s Shin-Etsu Handotai Co. and Mitsubishi Materials Corp.
Things started to change around the year 2000, as rising concerns about climate change coincided with a surge in oil prices and the prospect of subsidies for renewables. Solar panels were traditionally so costly they were only used for highly specialized applications such as space probes, as well as watches and pocket calculators that only sip power. Suddenly in the early 2000s, solar started to look like a competitive way of producing energy.
As a result, PV-grade polysilicon — made until then from material rejected by chipmakers — seemed like it might become a valuable commodity in its own right. Almost overnight, it went from a backwater to a boom industry. The growth has yet to stop. Since 2005, annual installations of solar panels have increased at an average annual rate of about 44%. This year, the capacity of new modules installed globally every three days is roughly equivalent to what existed in the entire world at the end of 2005.
Our fossil overlords don’t want domestic competition. As for foreign competition, well, Trump said he would build a wall. So I guess he did.