First Solar's Strategic 5N Plus Supply Deal: A Catalyst for U.S. Solar Manufacturing Supremacy

The clean energy transition is no longer a distant vision but a $2 trillion-per-year reality in the United States, driven by policy tailwinds and technological innovation. At the center of this transformation is First Solar, a leader in cadmium telluride (CdTe) thin-film solar technology, which has just inked a landmark supply agreement with 5N Plus, a global supplier of semiconductor materials. This deal is not merely a transaction—it is a masterstroke that accelerates First Solar's domestic production goals, cements its competitive edge over silicon-based rivals, and aligns with U.S. policies designed to secure energy independence. For investors, it represents a rare confluence of strategic execution, policy support, and market dynamics that could redefine the solar industry.

Domestic Production: Scaling to 14 GW by 2026

First Solar's partnership with 5N Plus is a linchpin in its plan to achieve 14 gigawatts (GW) of U.S. manufacturing capacity by 2026. The expanded supply agreement ensures a 33% increase in CdTe deliveries for 2025–2026, followed by a 25% boost in 2027–2028. This cadmium-based material is critical to First Solar's Series 6 and 7 modules, which rely on ultra-thin semiconductor layers (three percent the thickness of a human hair) to maximize efficiency. By securing a reliable domestic source of CdTe and cadmium selenide (CdSe), First Solar avoids the supply chain bottlenecks that plague silicon-based manufacturers reliant on Chinese polysilicon.

The U.S. Inflation Reduction Act (IRA) has turbocharged this strategy. First Solar is leveraging the 45X Advanced Manufacturing Production Tax Credit (MPTC), which provides $0.07 per watt for domestic CdTe modules. In 2025 alone, the company has already monetized $1.5 billion in tax credits, with recent transactions fetching $0.95 per $1 of credits. These funds are fueling the expansion of four existing U.S. factories and a fifth facility in Louisiana, set to begin production in late 2025. The result? A cost structure so lean that First Solar's 2025 manufacturing cost per watt ($0.75) is 30% lower than the $1.16–$1.48 range of silicon peers.

Competitive Differentiation: CdTe vs. Silicon

First Solar's CdTe technology is not just cheaper—it is structurally superior in a world where supply chains are increasingly politicized. Unlike silicon modules, which require complex, energy-intensive processes to produce discrete cells and panels, CdTe modules are monolithically integrated onto glass, reducing manufacturing steps and energy use. This streamlined process cuts embodied energy by 65% compared to silicon, a critical advantage as decarbonization targets tighten.

Moreover, First Solar's vertical integration—from semiconductor production to module assembly and recycling—eliminates supply chain vulnerabilities. Its CuRe program, which replaces silver with copper in module manufacturing, and AI-driven logistics further reduce costs. By contrast, silicon manufacturers face a “China-dependent” supply chain, where polysilicon, wafers, and cells are concentrated in a single geopolitical risk. The 201 tariffs on imported silicon modules and the IRA's 100% depreciation incentives for domestic production have widened First Solar's margin gap. In Q2 2025, the company reported a 45.6% gross margin and $341.8 million in net income—numbers that underscore its operational resilience.

Policy Tailwinds: A Perfect Storm for U.S. Solar

The IRA is not just a tax code—it is a blueprint for reshoring critical industries. First Solar's alignment with its provisions is near-perfect. The 45X MPTC, combined with the 26.4% Investment Tax Credit (ITC) for utility-scale projects, creates a virtuous cycle: lower costs for First Solar, higher returns for project developers, and faster adoption of clean energy. The company's domestic sourcing of CdTe and CdSe also qualifies it for the IRA's “domestic content” bonus, which could boost tax credit values by up to 10%.

Meanwhile, the U.S. Department of Energy's $7 billion in grants for domestic solar manufacturing and the 10-year extension of the ITC through 2032 provide long-term visibility. First Solar's $1.2 billion in cash reserves and $8.5 billion in equity position it to capitalize on these incentives without diluting shareholders. Analysts project that U.S. solar demand will reach 55% domestic supply by 2035, a target First Solar is uniquely positioned to dominate.

Investment Thesis: A High-Conviction Bet

For investors, the case for First Solar is compelling. The company's strategic partnership with 5N Plus ensures a secure, scalable supply of critical materials, while its CdTe technology and vertical integration create a moat against silicon-based competitors. The IRA's tax credits and grants are not just subsidies—they are a structural advantage that lowers First Solar's cost of capital and accelerates its path to profitability.

The risks? Global supply chain disruptions could still impact ancillary components, and CdTe's market share in the U.S. remains below 20%. However, First Solar's R&D pipeline—focused on efficiency gains and recycling—positions it to outperform. With 16 GW of planned capacity by 2026 and a cost structure that outpaces peers, the company is a cornerstone of the clean energy transition.

Conclusion: First Solar's 5N Plus deal is more than a supply agreement—it is a strategic pivot toward U.S. manufacturing supremacy. For long-term investors, this is a high-conviction opportunity to bet on a company that is not just riding the clean energy wave but shaping it. As the world races to decarbonize, First Solar's CdTe technology and policy-aligned execution make it a standout play in the solar sector.