TOYO Bets on Texas Onshoring as Section 232 Reshapes Its Solar Strategy
H1 revenue up 88% and gross margin doubled, but the real story is the company's pivot to U.S.-made polysilicon and a $357M HJT plant.
TOYO · Earnings Call · 2026-08-19
Strong results, new trade regime
TOYO Co., Ltd. opened its second-quarter 2026 call with a familiar refrain of strong top-line momentum. “Revenue for the first half of 2026 was approximately $261.0 million, an increase of 87.6% year-over-year.” — Takahiko Onozuka, CEO · 2026-08-19 Gross margin more than doubled to 32.5%, and net income jumped from $2.5 million to $45.8 million. But that financial strength is overshadowed by a far more consequential development: a new U.S. trade regime that could redefine the solar manufacturer's entire competitive position.
U.S. polysilicon lies at the heart of that shift. On August 6, President Trump issued Proclamation 11052 under Section 232, establishing minimum import prices and additional tariffs on polysilicon, ingots, wafers, solar cells, and modules, effective December 4. The proclamation creates an onshoring plan that lets Commerce grant duty offsets to companies that invest in U.S. manufacturing. TOYO argues it is uniquely positioned: roughly 70% of the polysilicon feeding its Ethiopian cell plant already comes from a U.S. producer, and it is moving to 100% by the fourth quarter.
The proclamation validates the strategy TOYO has been pursuing... increasing our use of U.S. produced inputs, developing a transparent allied nation supply chain and investing directly in U.S. advanced manufacturing.
That strategy now has a concrete cornerstone. The company announced a $357 million investment in a HJT plant in Humble, Texas, with 1.5 GW of initial capacity. Chief Strategy Officer Rhone Resch explained that the facility will not only supply high-efficiency cells but also serve as a platform for future perovskite-silicon tandem production.
“We are using U.S. polysilicon today, expanding domestic module capacity to approximately 2 gigawatts, developing advanced HJT cell manufacturing and R&D capabilities,” Resch said, framing the investment as a “reinforced investment cycle”: import compliant cells made with U.S. poly, use duty offsets to preserve capital, then funnel those savings into more U.S. factories.
Transition pains: CBP and guidance
But the transition is not frictionless. The company acknowledged that CBP reviews triggered detention of some Ethiopian shipments during the quarter. Resch stressed these are documentation issues, not an indictment of the supply chain. He said TOYO is providing “all the information all the way up to the quartzite mining,” and expects the detainments to be released this quarter, though he cautioned the timing is “a little bit unclear.”
Investors are also trying to reconcile the 232 windfall with a sequential revenue decline. Q2 revenue of $118.2 million was up 35% year-over-year but down from Q1's level (implied by the CEO's explanation of mixed shift). The company declined to reaffirm its full-year guidance, citing the twin uncertainties of CBP resolution and the final shape of the 232 agreement.
“Given the near-term uncertainty of the situation, we believe the outlook remains uncertain, and we have not reached the point of an appropriate timing to change our guidance.” — Harada Yasunari, CFO · 2026-08-19
This is a notable contrast to the prior quarter, when management was more buoyant. In May, Rhone Resch told analysts the 45x manufacturing credits were “not in our guidance... but they do provide an upside.” In March, Simon Shi said the company hoped to “maintain these gross margins” off the back of 25% margins in 2025. Now the conversation has shifted to policy mechanics and compliance reviews.
“We are optimistic that we will see the detentions be released in this quarter, but the exact timing is a little bit unclear.” — Rhone Resch, Executive (likely VP or similar, involved in strategy and government relations) · 2026-08-19
The company's positioning looks smart on paper: a U.S.-focused supply chain, an onshoring plan that could offset tariffs, and a cell plant in Texas that pre-empts the import MIPs. But the near-term earnings profile is hostage to administrative processes—Commerce's blessing on the plan, CBP's acceptance of the documentation. TOYO is essentially betting that its early adoption of U.S. polysilicon and its tangible investment will earn it preferential treatment.
For investors, the key question is whether the 232 framework turns into a durable tailwind or a regulatory quagmire. The proclamation itself is less than two weeks old, and Commerce has not yet issued any company-specific plans. Resch noted that companies are expected to submit detailed plans through the fall, with the program meant to encourage “bigger and faster” investment. But he also cautioned that “Commerce can still adjust the minimum import price structure,” leaving room for uncertainty.
TOYO's financials have clearly improved—working capital turned positive at $29.8 million from a $123.9 million deficit a year earlier—but the market is now pricing in execution risk. The stock tape is not available in this snapshot, but the absence of a sharp drawdown suggests investors are waiting for clarity.
The road ahead
The next catalyst is the October 6 Analyst Day in Humble, where management promises to detail its long-term road map. That may be the moment when the 232 story moves from policy theater to a concrete financial plan. Until then, TOYO is a story of promise, timing, and the unpredictable machinery of U.S. trade enforcement.