Dow Corning will abandon its never-operated Hemlock Semiconductor polysilicon facility in Clarksville, TN. The $1 billion-plus project was completed last year but never produced product because of oversupply in polysilicon markets and the impact of tariffs on polysilicon imported into China.
“As difficult as this is, the continued market adversity and complex political conditions have left no economically viable options for Hemlock Semiconductor to operate the site,” says Denise Beachy, president of Hemlock Semiconductor. “It is unfortunate for both the company and the community that these conditions have forced us to take this action.” Hemlock Semiconductor is comprised of several joint venture companies majority owned by Dow Corning.
Dow Corning expects to take a pre-tax charge of approximately $1.5-$1.6 billion because of the decision to shut the site, according to regulatory filings by Dow Chemical and Corning, which each own 50% of Dow Corning.
Hemlock Semiconductor continues to manufacture polysilicon at its Hemlock, MI, site, which has received more than $2.5 billion of investment in the last 10 years.
Clarksville employees were notified of the decision this morning and activities are underway to close the site, Hemlock Semiconductor says. The company says it will work with the local economic development agency in Clarksville to consider options for selling the site.
Hemlock Semiconductor announced the Clarksville investment in 2008. The plant was to have initial capacity of 10,000 m.t. of polysilicon, with the ability to expand production to 21,000 m.t./year.
Wacker is currently building a $2-billion, 20,000-m.t./year polysilicon unit at Cleveland, TN that is expected to start in second-half 2015.
In a separate development, Dow Corning cut liability related to breast implant litigation by $1.3 billion on 12 December. Dow Corning’s previous recorded liability related to implant litigation was $1.7 billion as of 30 September, representing the estimated remaining obligation for future funding of the settlement facility. Dow Corning filed for bankruptcy protection in 1995 because of liabilities from thousands of breast implant lawsuits, and emerged from bankruptcy protection in 2004. Dow Corning has paid approximately $1.8 billion to the settlement facility, and approximately $1.3 billion has been paid to claimants.
Dow Chemical says equity earnings from Dow Corning are expected to reflect a net charge of $100 million in the fourth quarter. Dow’s share of the implant liability reduction is expected to be approximately $400 million after-tax. Dow’s share of the $1.5-$1.6 billion Hemlock charge is expected to be approximately $500 million after-tax.
By Robert Westervelt
