Why Leopold bought TE. (It's not just an energy story)
This is what the US govt. would do. This is the reason why TE and TOYO will get more valuable
A couple of months ago, I laid out the supply chain of Solar and the important insights to know about Amerification of it.
When I picked up the phone and spoke to the IR team of TOYO, I realized something profound. Also realized why Leopold might have bought into TE.
Hours of researching the solar supply chain helped me connect the dots and I now know what the US govt. is incentivized to do.
This article will help you build conviction
So China has complete chokehold on Polysilcon.
You could try to produce Polysilicon elsewhere, but it is 3 times more expensive. Just look at Hemlock/GLW (US), Wacker(Germany) and OCI (Korea) the biggest non Chinese Polysilicon producers.
Like literal 3X
I pointed out in the previous article that Polysilicon (the raw material for Solar) is used and required for Semi conductor chips. 2% of the highest grade is used in semi conductors and 98% in Solar.
That’s the part that finally clicked for me
Solar and Semi are married at the hip
The economics of producing Polysilicon at home, doesn’t work, if you don’t have Solar buying up the 98% of the remaining produce . So in order to have American suppply chain for semi conductors, YOU have to have a business case for the 98% of its product which is solar.
TLDR:
Meaning, If you want to be long SEMI, You have to be long Solar.
I can already see what Trump administration will have to do. They got no choice but to pump American solar industry and continue incentivizing the build out, because they love their chips and want to bring it onshore
With this thesis, CSIQ, ARRY, NXT all warrant more closer look
I have written extensive deep dives on TE, if you haven’t read those yet. Here they are. As always DO NOT CHASE, when it is ignored again, swoop in.
P.S. This is why I wouldnt touch FSLR as they are the biggest US solar manufacturer but uses CdTe thin-film, not silicon. So if the policy goal is propping up the polysilicon→semi corridor, FSLR is outside the thesis