US investment in Jingao Technology is in doubt

In the face of the constant restrictions and restrictions imposed by the United States, Chinese photovoltaic companies have fully responded.
Recently, Goldtech is preparing to invest in the construction of a photovoltaic module factory in Arizona, USA. However, for the same component factory project, Kingo’s official announcement in the United States was $60 million, but its announcement in A-shares was $1.244 billion. Why?
The picture is crystal
From the first day of its birth, the Chinese photovoltaic enterprise, a component factory of Science and Technology Energy in Florida, USA, has basically encountered various encirclements and interceptions from across the ocean.
In response to the “anti-dumping” in the United States, Suntech Power established a 30MW module factory in Phoenix, Arizona, as early as 2010, becoming the first photovoltaic enterprise in China to establish a factory in the United States.
At the end of 2018, Jingke Energy invested $80 million to build a 400 MW component assembly plant in Florida, USA.
Recently, according to market rumors, Longji Green Energy will also build a joint venture factory with 2000 to 3000 employees in Columbus, Ohio, USA. Currently, it is recruiting HR personnel. Of course, this rumor has not been confirmed yet.
Today, the components factories of Jingao Technology in the United States are within reach.
012GW capacity, investment
The 1.244 billion gold high-tech American factory has finally been officially disclosed.
On February 3rd, Goldtech released an announcement on investing in the comprehensive capacity of the construction company, which will build a project with an annual output of 500 single crystal furnaces and a project with an annual output of 100 tons of slurry in Huishan, Guangdong.
Through this announcement, Jingao also disclosed the investment projects currently carried out in the United States:
“Announcement of Jin’ao Solar Energy Technology Co., Ltd. on the Company’s Comprehensive Capacity Investment and Construction”; Announcement No.: 2023-016
Jingao Technology will establish a new company to build a new 2GW component project in the United States. The investment amount is about 1.244 billion yuan, accounting for 7.54% of the company’s latest audited net assets.
In the approval process, the company pointed out that “the cumulative amount of project investment does not exceed 10% of the latest audited net assets, and there is no need to report to the board of directors for approval.”.
Indeed, although investing more than $12 billion in US projects seems considerable, it is hardly worth mentioning compared to the $40 billion investment cooperation plan of Jin’ao.
According to a research report released by Wood Mackenzie, a US research institute, it is expected that the installed photovoltaic capacity in the United States will increase by 66% compared to the initial forecast, and it is expected to increase by 70GW per year by 2030. In addition, the United States continues to impose various trade sanctions on Chinese photovoltaic enterprises, from “anti-dumping” to “Xinjiang related bills” to “temporary detention orders”, “anti circumvention”, and so on. The fact that Jinneng has built a factory in the United States will undoubtedly effectively address these outstanding issues.
Oddly enough, investments in American gold high projects are generally not expensive. The investment in 2GW production line is 1.244 billion yuan? I thought I was dazzled by the carbon number and accidentally got a “0”.
Introduction to “China Photovoltaic Industry Development Roadmap (2021 Edition)” by China Photovoltaic Industry Association:“
Currently, the domestic component production line equipment mainly includes welding machines, scribing machines, laminating machines, EL testers, IV testers, frame machines, gluing machines, upload and download robots, etc., all of which have been localized. The investment in new production line equipment in 2021 was 62000 yuan/MW, slightly lower than in 2020. With the continuous improvement of component equipment performance, single unit capacity, and component power, the investment cost of component production lines will still decline.
Trends in investment costs of component production lines from 2021-2030 (unit: 10000 yuan/MW)
According to the above investment cost trend chart, the average investment cost per GW of photovoltaic modules in China this year is about 58 million yuan.
The investment amount announced by 02A shares is higher than that of the official landforms of Arizona in the United States
Announced twice as high; Image source: pexels professional gallery in the integrated enterprise of dragon, crystal, fine, and combination
In China, Goldtech has established a mature global supply chain system earlier, integrating earlier, and is also recognized as a fine management and cost control expert in the industry. It has been widely spread in the industry that among several enterprises, Jingao’s component sales control price system is the most rigorous and never loses money. Even so, some of the investment projects raised by Jingao recently have very cautious investment costs that are far higher than the industry average. With regard to the convertible bond raising and investment plan that Jin’ao Technology plans to issue in the near future, the Stock Exchange has raised questions about “the rationality of the budget for the construction project raised and invested this time”. In the response report, Goldtech listed in detail the recent investment in unit capacity equipment of component companies.
Source: The second feedback report on the application documents for the public issuance of convertible corporate bonds by Jingao Solar Energy Technology Co., Ltd., 1-1-444
The issuance and financing scale of Jinhigh-tech convertible bonds was adjusted from 10 billion to 8.96 billion. According to the company’s announcement, the above projects include “building new factories, logistics warehouses, etc., purchasing production equipment and corresponding supporting facilities, etc.”.
The investment per gigawatt of production capacity is 139 million yuan, which is far higher than the industry average of 58 million yuan. However, compared to the 622 million yuan/GW project in the United States, it is still cheap.
Catch Carbon previously wrote that the cost of photovoltaic power stations in the United States is very high, about twice that of China. For details, see: “How does this private enterprise break the ice? Based on the industry average investment cost of 58 million/GW, is it 10.72 times that of China to build a parts factory in the United States?”?
That is, according to the investment standard of 139 million yuan/gigawatt disclosed by Jinao for domestic projects, the investment and construction cost of Jinao in the United States is 4.47 times that of China. But is it really the case?
On January 10th this year, the official website of the Arizona State Bureau of Commerce released a press release jointly released by both parties. The excerpts from the original translation are as follows:“
Jing’ao Solar, the global leader in solar cell and component manufacturing, announced today that it has leased space at its first manufacturing plant in Phoenix, Arizona, USA. The new factory will produce high-performance photovoltaic products and is expected to be put into production in the fourth quarter of 2023, creating more than 600 new jobs.
The new factory will invest $60 million to produce efficient solar panels (photovoltaic modules) for commercial and residential rooftop applications using highly automated assembly lines, as well as deploy utility scale solar power plants. Once fully operational, the annual production capacity will reach 2 GW. “
Yes, less than a month ago, Kingo announced in the United States that it would invest $60 million to build 2GW of capacity. In less than a month, it had become 1.244 billion yuan. Based on the US dollar exchange rate on February 4th, it is equivalent to US $184 million, which has doubled.
On the other hand, according to the US $60 million announced by Kingo, it is about 407 million yuan, equivalent to an investment cost of 200 million yuan per gigawatt. Considering overseas factory construction, if there are subsidies and tax returns locally, the investment intensity is relatively reasonable. (Carbon capture note: According to media reports, Jingke built a factory in Jacksonville, Florida, USA, in 2018, with an investment of 50.5 million US dollars, and received support and tax refund of 4.2 million US dollars from cities and states.).
According to the announcement of Goldtech, the American component project is “the recent accumulation of the company has occurred.”. Is it US $60 million or RMB 1244 million?
Do you want to produce batteries or build power stations?
According to the official website of Jingao Technology, the company has at least eight solar power plants in the United States, three of which are located in Arizona, and were completed or released in 2018.
In a local joint press release from Kingo and Arizona, it was mentioned that “the deployment of utility scale solar power plants”. However, this important information did not appear in the announcement of Goldtech.
As the cost of photovoltaic main materials enters the decline channel, the price of photovoltaic modules decreases, and power stations increasingly become the cash output of excess profits in the photovoltaic industry chain. If Jingao builds photovoltaic power stations in the United States, raising the company’s valuation is a good thing. There is no need to hide it in the announcement. More importantly, the three projects under this information in the announcement are all domestic distributed power plants.
The giant solar power plant currently under construction in the United States is the largest solar power plant in the future in the United States. It is located in northern Indiana with a total investment of $1.5 billion and a total installed capacity of 1650 megawatts. In this way, the investment cost of a single ceramic tile is approximately $1.1, equivalent to 7.6 yuan. Based on this calculation, the difference between Jingao’s two disclosure standards is approximately $124 million, which is equivalent to building a 110MW solar power plant in the United States.
On the afternoon of January 12, in response to the issue of building a factory in the United States, a person from the Jing’ao Technology and Securities Department responded to the Zhejiang Newspaper Group Bank-based Finance. The factory in Arizona, USA, has not yet been specifically planned, but it must be producing N-type batteries. At the same time, the company needs to determine whether to build a heterojunction or Topcon based on the profitability of different panels this year, and build a production line in the fourth quarter.
Does the US project add solar cells? However, if so, based on the compliance requirements for information disclosure and the practice of Goldtech, this announcement will definitely express “batteries”, that is, “2GW batteries and 2GW component projects,” rather than just component projects.
04 New challenges brought by photovoltaic enterprises’ investment and construction in the United States
This is a review of the efforts of the United States to suppress Chinese photovoltaic enterprises through trade and other means over the years, organized by Guohai Securities. This is really difficult for Chinese photovoltaic companies.
As early as 2010, Artes established a manufacturing base in Ontario, Canada, successfully avoiding trade pressure from the United States. In addition to setting up a factory in the United States, Jingke also purchased 70000 tons of silicon materials from Wacker, Germany, through a long-term association in 2021. Only last year did some goods pass the “temporary detention order” inspection of the United States customs and be released.
In recent years, photovoltaic companies have successively set up factories in Southeast Asia, also in response to the US anti-dumping. In response, the United States has taken another drastic action. On December 2nd last year, the US Department of Commerce announced the preliminary results of the anti circumvention investigation. It believes that BYD (Cambodia), ATES (Thailand), Trina Solar (Thailand), and Vietnam Photovoltaic (Longlvergy subsidiary) have anti circumvention behaviors and will impose tariffs of 27%, 16%, 254%, and 254%, respectively. Of course, this is not the final decision, and there is still room for manoeuvre.
Various signs indicate that if Chinese photovoltaic companies want to enter the US market and establish factories in the US, it should be a solution. Take the Beijing Australia project in the United States as an example, which can provide 600 jobs for local people.
On December 30, 2022, the official website of the Ministry of Commerce of the People’s Republic of China issued the “Catalogue of Technologies Prohibited and Restricted from Export (for Comments)” to solicit public opinions, including the inclusion of large-scale silicon chip technology in the restricted export technology catalog. Industry insiders believe that this time, the Ministry of Commerce and the Ministry of Science and Technology have listed large-sized silicon chip technology as an export restricted technology, which may also be a “indigenous manufacturing” measure to address major photovoltaic markets such as Europe, the United States, and India.
Western mainstream media such as the Wall Street Journal also believe that China’s plan to restrict the export of key solar manufacturing technologies may delay attempts to establish a domestic solar supply chain in the United States.
However, on February 2nd, Yang Tao, Director of the General Office of the Ministry of Commerce of the People’s Republic of China, responded that there was a deviation in the market’s understanding of export restrictions on solar cell production technology. China will continue to adhere to the concept of open cooperation, continue to optimize the business environment for technology trade, and promote global technology trade exchanges and cooperation.
The cost of setting up a factory in the United States is very high.
According to an in-depth survey by China First Financial, the labor cost of building a factory in the United States is about 4-5 times that of China, while the electricity cost in Arizona is about twice that of China. Of course, the cost of land is not cheap, and we still have to face challenges in labor, taxation, environment, culture, and other aspects. None of this is difficult. We shouldn’t be afraid of trouble in business.
But now, when Chinese photovoltaic companies set up factories in the United States, they not only need to calculate economic accounts, but also balance the relationship between the overall interests of the local industry and the interests of the enterprise.
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