Southeast Asian PV Production Faces Uncertainty Amid U.S. Tariffs: Chinese Firms Pivot to New Markets

As a critical market for Chinese photovoltaic (PV) companies exporting to the United States, Southeast Asia may no longer hold its strategic position.

During their interim results announcements, several leading Chinese PV companies highlighted future plans for their Southeast Asian production capacities. Many firms have hinted that these capacities might shift away from supplying the U.S. market and instead cater to other global markets.

Due to the high tax rates, capacities in Vietnam are effectively barred from entering the U.S. market. Similarly, the module production capacities in Malaysia and Thailand have lost their competitive edge in the U.S., according to Longi Green Energy's General Manager Zhong Baoshen. Batteries, on the other hand, might still have a chance due to their lower value in the supply chain despite the tariffs.

According to an industry expert, the production facilities in Southeast Asia have two primary options: sell to nearby markets such as Indonesia and Laos, or bear the imposed tariffs and continue exporting to the U.S.

Data from the U.S. International Trade Administration shows the dumping tax rates are quite steep: Cambodia - 125.37%, Malaysia - 81.22%, Thailand - 70.36%, and Vietnam - 271.28%.

Multiple companies have expressed the possibility of repurposing their Southeast Asian capacities for other markets. For instance, Longi Green Energy had stated that there are no plans to relocate its Southeast Asian PV capacities to other regions yet. Markets such as India and Canada could maintain the operational status of these capacities.

JA Solar plans to establish an overseas supply chain to better serve international markets. Trina Solar, which has significant production in Thailand, mentioned it might pivot its Southeast Asian manufacturing to serve European or other global markets depending on the outcomes of the U.S. decisions regarding tariffs.

Analysts agree that the Southeastern Asian capacities of smaller companies might relocate, while others might endure tariffs to continue U.S. exports. Furthermore, certain capacities will serve the few markets with specific origin requirements for modules, while some might shut down eventually.

Local production in the U.S. is becoming a viable alternative for Chinese PV companies. Firms like Longi Green Energy, Jinko Solar, Trina Solar, and JA Solar have already initiated or planned factory establishments in the U.S. Longi's joint venture plant in Ohio has commenced production this year, while Jinko's and Trina's respective U.S. capacities are due to come online within this year. Meanwhile, JA Solar's planned 2GW capacity project is also progressing as scheduled.

As of now, Southeast Asian capacities are at a crossroads. Expanding or shifting production to safeguard market presence in the U.S. amidst high tariffs remains a challenge. Efficiently catering to other international markets might alleviate some of the pressure and stabilize the operational footprint of these PV giants.