FILE PHOTO: An employee works on the production line for solar panels at a factory of GCL System Integration Technology in Hefei, Anhui province, China May 16, 2024. (China Daily via REUTERS/File Photo)
BEIJING/LOS ANGELES, April 15 (Reuters) - Chinese officials have held initial talks with providers of equipment to make solar panels as they consider limiting exports of the most advanced technology to the United States, said five people with knowledge of the consultations.
Such a clampdown would risk investments by U.S. firms and set back a race for space-based computing, as China, estimated to make more than 80% of the world's solar panel components, is also home to the top 10 suppliers of equipment to make solar cells.
No rule has been finalised, and the talks have not advanced to the stage of canvassing formal feedback from an industry grappling with severe overcapacity after years of aggressive expansion, two of the sources said.
China's commerce ministry and its state council, or cabinet, did not immediately respond to faxed requests for comment from Reuters.
IF ADOPTED, STEP COULD THREATEN U.S. FIRMS' PLANS TO EXPAND
If adopted, such a move could threaten plans by U.S. firms, such as Tesla, to build new factories or expand existing ones in efforts to boost local production.
It would also widen export controls in another area of technology where China has a lead, building on Beijing's move to control rare earth exports a year ago in response to U.S. tariffs.
The step comes at a time when the rivalry between China and the United States has spilled into the race to produce space-based computing powered by solar panels, a focus for Tesla CEO Elon Musk.
Other U.S. tech companies such as Google and Amazon are investing in ground-based solar and energy storage systems, even as they count on similar orbital data centres to satisfy AI's growing demand for power.
Analysts who track China's solar industry and executives have braced for export controls, in part because concern is growing over efforts by Musk and others to boost solar panel production in the United States, reducing reliance on China.
DOWNTURN COULD SEE INDUSTRY LOSE OUT TO U.S. COMPANIES
Musk seeks to exploit China's solar downturn to acquire equipment and talent, Xu Xiaohua, chairman of Anhui Huasun Energy, told the Caijing business magazine this year.
He called for greater efforts by Chinese companies to retain their lead in technology.
Huasun did not immediately respond to an emailed request for comment.
The prospect of China's curb comes amid preparations for a summit of leaders Xi Jinping and Donald Trump in the Chinese capital next month that both sides view as an opportunity to preserve more stable ties on trade matters.
Reuters reported last month that Tesla was looking to buy $2.9 billion of equipment for making solar panels from Chinese suppliers such as Suzhou Maxwell Technologies, which was seeking export approval from the commerce ministry.
Musk has said solar power could supply all the electricity needs of the United States and Tesla has pushed a goal of making 100 gigawatts of solar manufacturing on American soil before 2028.
'NIGHTMARE' PROSPECT OF TESLA'S SELF-SUFFICIENCY PUSH
"Tesla succeeding in its solar self-sufficiency push could prove a nightmare for China's world-leading solar manufacturers," research firm Trivium China, focused on Chinese government policy, said in a note this month.
Not only would they lose a major potential customer, but they could face the emergence of a formidable new competitor at a time when they are already under enormous financial pressure, it added.
"Beijing won't sit idly by as its industrial champions inadvertently aid the industrial policies of rival countries."
Suzhou Maxwell Technologies was visited by officials after Reuters reported on Tesla's talks with Chinese suppliers, said three of the sources who sought anonymity because the talks with regulators are confidential.
Talks between regulators and Suzhou Maxwell Technologies focused on possible curbs on shipments to the United States, including high-end equipment needed to produce higher efficiency panels, a technology known as HJT, two of the sources said.
Suzhou Maxwell and Tesla did not immediately respond to emailed requests for comment.
SOME ASPECTS YET TO EMERGE
Reuters could not determine how sweeping any curbs would be in terms of other export markets, when any licensing requirement could take effect or what products would be covered.
In 2025, China threatened licensing requirements for exports of a related technology, high-end batteries and materials for the energy storage systems demanded by large-scale solar projects, but paused implementation until November this year.
Other Chinese solar producers have continued to negotiate and ship solar manufacturing equipment to the United States, including other firms bidding for the Tesla order, two people said.
HJT or heterojunction solar technology boosts power output by using a wafer of crystalline silicon sandwiched between very thin layers of silicon in the cell, allowing more of the electrons generated by sunlight to be captured as electricity.
(Reporting by Reuters China Newsroom, Nichola Groom in Los Angeles and Norihiko Shirouzu in Austin, Texas; Editing by Clarence Fernandez)
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