Biden’s policies threaten China’s domination of solar panels

Everybody, Peter Zion here coming to you from fairly windy and noisy Miami, I hope the sound on this one’s okay. The news that you can use this week is that the Chinese government is considering putting export bans on certain types of solar panel manufacturing, specifically, the ability to make the wafers and skill and inputs that go into certain types of silicon panels. Some people are saying that this is a retaliation to things that the United States has done recently with semiconductors. I don’t think there’s a direct link here, a couple of things. First of all, when you think of technology, and you think of China, those two words only go together in the word manufacturing, the Chinese do not have a history and really any industry or sub sector of being the innovators, they’ve got the manufacturing plant, because it used a mix of labor and security and scale in order to become the dominant player in a lot of sectors. Solar panels are one of those. But they don’t do much innovation at all. In fact, we were kind of racking our brains over this in the offices, we know what items out there were the Chinese, the pioneers out there, they hold the technological edge, and there’s still a demand for outside and the rest of the world and there was really nothing. What’s going on here is that the Chinese have discovered that the United States is starting to build an industrial policy, and lots of other countries in the world are going with it. And once you marry state power to the efficiencies that you get from the American workforce, and capital markets and market size, well, the Chinese just aren’t nearly as important and that sort of world. So in those rare places where they do have a technical edge, they would like to keep it. This brings us to the solar panels. The Chinese dominated this space years ago and drove out most of the competition completely and then were left as the only ones in the space, something like 80% of the global total. And to get the assembly of solar panels requires a lot of fingers and eyes something Chinese dominate because of the size of their labor force. And that means they have made certain technological advances. The one that they’re talking about, at the moment, the most important one by far is that the Chinese and only the Chinese can make the wafers for the PV panels larger and thinner than anyone else. It’s an edge they would like to keep. But with the United States now mandating that a certain percentage or rising percentage of solar panels have to be manufactured in the United States, this technology is going to move there, whether it’s the us having to develop it or not. So the question comes down to what kind of timeframe are we talking about? If the American started from a naked start, this would probably be a five to eight year process, which for the Biden administration is just not fast enough. And so that brings us to the question of espionage. Now, the Americans as a rule are not great at industrial espionage. And it’s because our economy is too large, and the government tends to be too hands off. So let’s say for example, that the CIA did have the capacity to steal the plans for the next transmission that the Germans were able to put together. Who do you give it to, for Chevy doesn’t work that way here, because we would have to choose sides on everything, our economy is too big, there just aren’t a lot of sectors where we only have one significant firm. But that’s not the case. In most other systems where you have national champions, in part because of technology theft. The three countries that would be most likely to go after this are three countries that after China are the biggest thieves of technology in the world. And that would be France, South Korea, and Israel. And of those three, the South Koreans are definitely the ones to watch, because they now have a fairly robust history of building industrial plant within the United States in order to meet whatever requirements the US government demands. So I can absolutely see a future where either the Biden administration breaks with long standing policy and actually gets intelligence professionals involved in technology transfer against the wishes of the home country, or more likely, the South Koreans have already stolen the stuff and they’re already negotiating with the Biden administration on how to build stuff on our side of the border in order to get the Koreans concessions and other economic sectors, which is something they would direly love anyway. One way or another this is going to happen the Biden ministration has already put out the money. The demand is there. Solar panels are getting more efficient every year. They’re making more sense in more parts of the country. But most of all, most importantly, the political will for the general population to play hardball with the Chinese is there. So all the pieces are in place and Chinese leadership in this sector, it’s days are numbered. And even if that proves to be false. If the Chinese refused to export the tech to the United States, then the United States won’t have a choice but to build the stuff itself. One way or another. Solar panels are coming home. Alright, that’s it for me. Take care everyone. Bye