The U.S. Commerce Department's investigation into whether certain solar manufacturers are evading tariffs on Chinese imports by relying on factories in Southeast Asia has sparked outrage throughout America's solar industry.

The nation's largest solar panel producer, First Solar Inc., however, views the Biden administration's probe as a "positive step towards addressing the problem of mainly crystalline silicon Chinese modules," CEO Mark Widmar said April 28 on the company's first-quarter earnings call.

"For too long, the American solar manufacturing industry has been under siege from the Chinese-headquartered and -subsidized companies that have been violating the rules of free and fair trade," Widmar said.

Washington, D.C.-based trade group Solar Energy Industries Association, which opposes the investigation, has warned that potentially half of the planned domestic capacity additions in 2022 and 2023, as well as Biden's clean energy policies, are in jeopardy — concerns that Widmar dismisses.

"We've heard the 'sky is falling' narrative pushed by lobbyists advocating for China to have free rein in the U.S. market," the CEO said. "Their doom and gloom is telling. It suggests that they are afraid that the Department of Commerce will find that the Chinese solar manufacturers, in fact, engaged in circumvention and will hold them accountable for their unfair and unlawful trade practices."

Auxin Solar Inc., a small Silicon Valley-based solar-panel maker, requested the investigation. First Solar also supports ensuring that imported crystalline silicon solar panels are entering the U.S. market lawfully, Widmar said.

Chinese solar panel imports represent First Solar's biggest competition. The Arizona-based company produces cadmium-telluride thin-film panels in Ohio, Malaysia and Vietnam. First Solar is expanding production in Ohio and is starting up a new factory in India in 2023.

'Deeply misguided'

Widmar said the U.S. solar lobby is trying to depict Auxin as an isolated actor "seeking to inappropriately exploit the law," but the controversial case is "precisely" what such trade inquiries were designed for.

Arguments that the Commerce Department probe will adversely affect the Biden administration's climate agenda is another "false narrative," Widmar added.

"Trading away responsible ultra-low-carbon solar manufacturing for dependency on China is deeply misguided" because coal primarily powers China's solar power production, Widmar said. "Smokestacks not visible from Pennsylvania Avenue are no less harmful to the environment."

Where First Solar agrees with the U.S. solar lobby is on the need for federal government subsidies for domestic solar manufacturing.

"The Biden-Harris administration has the opportunity to deliver a meaningful and durable long-term solar industrial policy through the use of a manufacturing incentive," Widmar said.

The First Solar executive applauded the Uyghur Forced Labor Prevention Act, a law that Biden signed in December 2021. Starting in June, the act bans shipments linked to China's Xinjiang region, a large producer of solar panel feedstock materials, unless importers can verify that goods were made without forced labor.

Q1 sales far below Street estimates

Supply chain headwinds and other threats present "a challenging 2022" for the company's balance sheet, Widmar said.

First Solar saw its sales plummet in the first quarter of 2022 to $367.0 million. That figure represents less than half of the sales in the same period of 2021 and nearly 38% below the S&P Capital IQ consensus estimate. First Solar CFO Alexander Bradley attributed the slide to "lower module volume sold, reflective of seasonality and increased transit times and lower average module [prices]" in addition to "a decrease in revenue from our residual business operations."

The company's adjusted net loss in the first quarter was 41 cents per share, slightly lower than expected.

For the year, First Solar expects, at a minimum, to break even while generating $2.4 billion to $2.6 billion in net sales on shipment of 8.9 GW to 9.4 GW of solar panels.

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