REC Silicon Adjusts Polysilicon Inventory Goals Amid Market Challenges

REC Silicon

Norway-based REC Silicon has revised its goal for clearing its inventory of semiconductor-grade polysilicon. Originally aiming to clear it by the end of 2024, the company now expects to meet this target by mid-2025 due to low demand in the market. As part of its shift to focus on silicon gas production, REC has been adjusting its production strategies, including halting polysilicon production at certain facilities.

Shifting Focus to Silicon Gas Production

REC Silicon, which produced semiconductor-grade polysilicon in Butte, Montana, and solar-grade polysilicon in Moses Lake, Washington, faced challenges that led to the closure of its Butte plant in mid-2024. High electricity costs and weak semiconductor demand were the primary drivers behind this decision. Additionally, REC ceased production at its Moses Lake facility due to the difficulty of achieving the high purity required for polysilicon used in solar cells. As a result, the company is transitioning to focus exclusively on silicon gases, which are essential for semiconductor and solar panel manufacturing.

The long-term strategy for REC involves increasing its supply of silicon gases to semiconductor manufacturers, with a notable projection for US semiconductor production to double between 2022 and 2032. The company is also expanding its role in the solar industry, as domestic solar cell manufacturing capacity is expected to increase by 1,300% over the coming years.

New Opportunities in Silicon Battery Anodes

In a major strategic shift, REC Silicon plans to start supplying silicon gases to Sila Technologies, a company that produces silicon battery anodes, in the second half of 2025. This partnership will be a significant part of REC's new focus on silicon gases, as the company is currently in discussions with six other silicon battery anode manufacturers. As electric vehicle production continues to grow, carmakers are seeking alternatives to traditional lithium-ion batteries with graphite anodes.

The Butte plant is equipped to produce 7,400 tons per year of silane and other silicon gases, while the Moses Lake facility could reach a production capacity of 24,000 tons per year. The company is keeping the Moses Lake facility operational to ramp up production when market conditions improve.

REC Silicon Shifts Focus from Polysilicon to Silicon Gases Amid Production Challenges

REC Silicon

REC Silicon, a Norway-based manufacturer, is halting its efforts to produce solar-grade polysilicon at its Moses Lake, Washington facility due to persistent quality issues, pivoting to focus on the production of silane gas, a strategic shift reflecting changes in market demands and internal capabilities.

Production Shift Due to Quality Challenges

Initially, REC Silicon aimed to resume polysilicon production supported by a significant investment from South Korean solar panel producer Hanwha Qcell in 2022, which included a 10-year offtake agreement. However, despite several attempts to enhance the quality of the polysilicon, REC faced continuous challenges in removing key impurities. The product ultimately failed a qualification test in December, leading to decision of shutting down the polysilicon production line. The first deliveries were consistently delayed throughout 2024, failing to meet the high purity standards required for solar cell production.

Strategic Refocus on Silicon Gas Production

With the closure of the polysilicon segment, REC Silicon is now redirecting its focus towards the production of silicon gases, particularly silane, which is used in the manufacture of silicon anodes for batteries. This move is expected to better align with the evolving market dynamics, especially as the demand for battery materials increases. REC Silicon's shift is timely, considering the reduced potential customer base in the U.S. for solar-grade polysilicon, exacerbated by the doubling of U.S. tariffs on polysilicon imports from China.

The company anticipates the shutdown process will take approximately three months, during which it will maintain the necessary equipment for silicon gas production. This strategy not only saves costs but also allows for operational flexibility, enabling the company to potentially restart or scale operations based on future market needs.

In September, REC signed a significant contract to supply silane to Sila Nanotechnologies from the first quarter of 2025 through to 2031. Sila Nanotechnologies also holds contracts with major firms like Mercedes-Benz and Panasonic, indicating a strong upcoming demand for REC's silicon gas products.