Massachusetts-based 1366 Technologies announced Tuesday it is partnering with Hanwha Q Cells on a factory in Malaysia, which will be the first factory to produce 1366's proprietary solar wafers.

The wafer manufacturer originally planned to open a plant in the U.S., after receiving $17 million in grants from the Department of Energy to develop its technology and a $150 million loan guarantee “to build innovative, new manufacturing facilities.” That loan guarantee ultimately went unused. 

The Malaysia plant, which is owned by Hanwha and uses 1366’s technology, will sit next to Hanwha’s cell and module manufacturing site in Cyberjaya, as part of a nonexclusive supply partnership. 

The announcement that the company and its technology are setting up shop in Malaysia — after it dropped a planned facility in New York last year — may come as another blow to the Trump administration’s made-in-the-U.S. agenda 

1366’s “direct wafer” process is unique because it significantly reduces the waste associated with cutting panels from silicon ingots. Instead, 1366’s process melts silicon into a molten bath to produce wafers.

The company says its product costs less than half the price of conventional wafers, which make up a significant portion of cell costs, because the process wastes little polysilicon. Early on, 1366 stated its mission as making solar power cost-competitive with coal. 

The fastest path to a production facility

Though federal investments helped foster the commercialization of 1366’s technology and the company had hoped to open its first factory in the U.S., head of communications Laureen Sanderson said working with a partner was the fastest path to a production facility. 

“It became time, given the changes in the market and just the fact that the technology was ready, to begin to pursue some of the other opportunities that were available to us,” Sanderson said. “We are still looking for ways to make a U.S. factory happen.”

“It’s exceptional that a U.S. innovation has made its way from the lab to the factory floor, and that is as much a testament to U.S. manufacturing as most anything,” she added.

In 2007, 1366 Technologies spun out of a Massachusetts Institute of Technology effort to lower the price of solar through efficiencies in silicon solar cell production. The company went on to win grants from DOE’s SunShot Initiative — which, in part, aimed to “strengthen the U.S. supply chain for manufacturing and commercializing cutting-edge PV technologies” — and the Advanced Research Projects Agency-Energy. In total, the company said, it has received $17 million in DOE grants. 

DOE finalized the $150 million loan grant for 1366 in 2011. But 1366 never used the funds, and the company said to extend the loan they were required to reapply (DOE did not immediately respond to confirm if this is standard). Instead, in January 2018, 1366 decided to withdraw. 

Now, the company’s investing in Malaysia. The plant's initial capacity is 100 megawatts, but 1366 said the project would eventually ramp to several gigawatts. 

America first?

Though Sanderson said a U.S. plant “remains in [1366’s] strategic plan,” the company is looking for an exclusion from Section 201 tariffs to help make it happen. If the company manufactures in the U.S., it would like to see an exemption for cell and module manufacturers that use its product.

“The ultimate goal is to make that path to a U.S. factory even clearer,” said Sanderson, who added that an exclusion is “smart policy in terms of supporting U.S. innovation and U.S. born technology.”  

The company does still maintain research and development facility in Bedford, Massachusetts that employs about 60 people. 

Locating a wafer plant in the U.S. would also be a boon to the struggling U.S. polysilicon market, which was dealt a blow earlier this month when REC Silicon announced it might temporarily shut down its Washington plant (the company has since decided to keep the plant running at 25 percent capacity). Most polysilicon demand now comes from China, which has leveraged duties against U.S. polysilicon companies, but Sanderson said a U.S. 1366 plant would use U.S. polysilicon. 

Brandon Hurlbut, a co-founder at business advisory group Boundary Stone Partners, said 1366’s move in Malaysia is a sign that the U.S. is losing out on opportunities to foster and capitalize on important technologies. That’s especially true for 1366, which he said “DOE nurtured…every step of the way.”

Hurlbut worked as chief of staff at DOE when 1366 received its loan guarantee. He said the program is specifically designed to support technologies and companies that repay taxpayers, reap returns for the economy and create jobs. 

“We should be supporting these companies,” said Hurlbut. “The president says he’s for America first and he’s for infrastructure. Well, he’s got tens of billions of dollars sitting there.” 

“That’s not America first to me,” he added.

Meanwhile, Hurlbut said, other countries such as China are “rolling out the welcome mat” for new technologies. 

Some foreign companies are making moves to gain tariff-free access to the U.S. by setting up manufacturing facilities, however. 1366’s partner, Hanwha Q Cells, for instance, is working on a U.S. plant in Georgia. Hanwha said it had not decided whether 1366 wafers may be used at that plant in the future, and that "it depends on the global market situation and our business plan."

This story has been updated with comment from Hanwha Q Cells and a decision from REC Silicon to keep its plant running.