Author Alan Tu
Updated December 09, 2022

After seven months of investigation, the U.S. Department of Commerce on December 1 issued the preliminary findings of circumvention, ruling that four of the eight companies being investigated, Cambodia, Malaysia, Thailand, and Vietnam, bypassing U.S. tariffs on a country-wide basis. Commerce will continue the investigation and make a final determination on May 1, 2023.

The following are found circumventing:

221209_anti-circumvention list_en_1

Prior to the issue of the preliminary determination, the White House announced a 24-month tariff exemption on June 6. As a measure to sustain local production, the executive action allows products from the four countries a two-year tariff suspension until June 6, 2024. Products exported to the U.S. after November 15, 2022 must be utilized in the U.S. by no later than 180 days after the Date of Termination.

Latent problems

Despite the preliminary findings, products from Southeast Asia will not face tariffs, thanks to the two-year suspension. Still, the preliminary findings indicate risks and concerns lie ahead for exporters in the future. 

According to the Commerce notice, manufacturers may still bear tariffs after the suspension. As the preliminary determination applies on a country-wide basis, all manufacturers from the four Southeast Asian countries, listed, or found circumventing, or not, shall manage to acquire exemption certificates before the two-year tariff window ends.

Cells and modules consisting of non-China wafers (produced from China-origin polysilicon or not) will not be subject to anti-circumvention tariffs.

  1.  Cell: Cells produced from China-origin wafers and completed in the four Southeast Asian countries will be subject to anti-circumvention tariffs. 

  2. Module: Modules consisting of cells produced in the four Southeast Asian countries from China-origin wafers or those of which more than two of the following BOMs are produced in China: (1) silver paste; (2) aluminum frames (3) glass; (4) backsheets; (5) ethylene vinyl acetate sheets; and (6) junction boxes will be listed as to be circumventing.

On June 6, 2024, when the exemption ends, products and raw materials of manufacturers from the four Southeast Asian countries will be regulated. Lofty anti-circumvention tariffs will be imposed on products that fail to meet the requirements.

Coping strategies

InfoLink offers feasible solutions:

1. Use non-China wafers: 

This method seems to be the most direct and effective but less likely to be realized, given operating costs, manufacturing environment, and more monetary investment required of setting up production plants overseas.

Presently, sources of non-China wafer are scant, with only few vertically integrated companies planning production expansions. To date, only Longi, Jinko, JA Solar, AUO, and Norwegian Crystals have production capacity outside of China. Excluding AUO and Norwegian Crystals, which focus on low-carbon market, the other three will together cumulate 20 GW of wafer production capacity by the end of 2024. Other vertically integrated ones are expected to ramp up production expansions after the issuance of the preliminary determination. 

Manufacturers exporting cells to the U.S., with no access to non-China wafers, will lose market shares gradually, for it is extremely challenging to set up production plants overseas.

2. Use at least four of the six above-mentioned BOMs that are manufactured outside of China

Non-China BOM production capacity remains shy of the 40-GW demand of the U.S. in 2024, as InfoLink estimates.

  • Silver paste: Major suppliers overseas are Heraeus and Giga Solar. Their production capacity is sufficient to provide for the entire cell manufacturing sector in Southeast Asia.

  • Aluminum frames: Aluminum frames are mostly produced in China. There is not much overseas production capacity. Yonz Technology has deployed 180,000 MT of production capacity in Vietnam, which is expected to start coming online in the fourth quarter of 2023, satisfying at least 30 GW of module demand.

  • Glass: Currently, major suppliers overseas include Xinyi Solar, Flat, Jinjing Group, Borosil, and GMB. Jinjing dedicates most of its production capacity in Malaysia to First Solar, and in India to its in-house capacity. GMB closes production plants due to surging natural gas prices. As a result, glass production capacity available for PV module manufacturing in the U.S. is relatively limited.

  • Backsheets: Major suppliers overseas are Coveme and Crown Advanced Material. However, since module exported to the U.S. are mostly glass-glass modules, this is relatively impractical.

  • Ethylene vinyl acetate (encapsulant): Stripping out those of vertically integrated businesses for their in-house production capacities, there are around 160 million m2 of encapsulant production capacities overseas (including POE), translating to 16 GW of supply. In Southeast Asia, there are more than 500 million m2 of encapsulant production capacity, as leading manufacturers expand production in Vietnam. Non-China encapsulant production capacity will meet demand in the future.

  • Junction box: Presently, China accounts for most of the junction box supply. A few overseas companies turn to produce high-end smart junction boxes. Modules exporters to the U.S. cannot wean themselves off Chinese junction boxes in the short term.

To obtain advantage when exporting to the U.S., manufacturers are advised to seal orders as soon as possible to secure non-China BOM supply, which is already limited. As for production expansions outside of China, manufacturers can start with BOMs with lower investment threshold, such as aluminum frames, to enhance long-term competitiveness.


The Uyghur Forced Labor Prevention Act, implemented on June 21, is the major inconvenience for the U.S. market. Recently, some modules made with non-China sourced materials were successfully entered, but more module makers express concerns about shipments in the long run. The two-year tariff suspension is to be heeded, as the U.S. President may modify the executive order any time. Recently, it is rumored that the suspension may be canceled. Uncertainties will continue to cloud the U.S. market next year. 

InfoLink expects US demand to stay at 24-28 GW this year due to short supply caused by surging prices and policy change. During 2023 and 2024, demand will pick up as prices decline across the supply chain, coming in at 40-50 GW in 2024.

The Commerce notice also touches on the source of module BOM, indicating larger scope of future investigations. The market has yet to see wafer or BOM production expansions outside of China, but the Inflation Reduction Act of 2022 is still a huge incentive, for it will boost wafer and BOM demand overseas in the recent two years. U.S. module makers and companies planning for expansions start seeking local suppliers and opportunities of co-investment. The disadvantaged position of U.S. manufacturing is going to change in a foreseeable future.

The tariff suspension window provides U.S. importers with sufficient time to adjust local supply chain and examine their review mechanisms in response to the anti-circumvention probe, to ensure the exclusion of imported products from further investigations.

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