On Thursday, First Solar (NASDAQ:FSLR) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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The full earnings call is available at https://events.q4inc.com/attendee/875759178
Summary
First Solar reported a record first quarter revenue with significant sales in India and margin expansion, achieving an adjusted EBITDA above expectations.
The company secured gross bookings of 1.9 GW, including 1.4 GW in the US market, with plans to expand its CURE technology across its fleet by 2028.
First Solar's US facilities are operating near full capacity, while international facilities in Malaysia and Vietnam face reduced utilization due to trade dynamics.
The company's competitive position in the US and India is bolstered by its technology, domestic manufacturing, and independence from Chinese supply chains.
Full-year 2026 guidance remains unchanged, with expectations for the second quarter to maintain a strong performance despite potential policy and regulatory impacts.
Full Transcript
OPERATOR
First Solar Investor Relations Good afternoon and thank you for joining us. We're joined today by Mark Widmar, our Chief Executive Officer, and Alex Bradley, our Chief Financial Officer. Mark will provide an overview of our first quarter performance and an update on technology, manufacturing and market conditions. Alex will then cover our bookings, financials and our 2026 outlook. After our prepared remarks, we'll open the line for questions. Today's discussion contains forward looking statements. Actual results may differ materially due to risks and uncertainties as described in our earnings press release, other SEC filings and earnings materials available at investor.firstsolar.com we undertake no obligation to update these statements to new information or future events. We will also reference certain non Generally Accepted Accounting Principles (GAAP) financial measures. Reconciliations to the most directly comparable Generally Accepted Accounting Principles (GAAP) measure are in our earnings press release and presentation. This non Generally Accepted Accounting Principles (GAAP) financial information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with US GAAP. With that, I'll turn it over to Mark. Thank you and good afternoon. Beginning on Slide 4, we delivered a strong start to 2026 with record first quarter revenue, record sales in India, meaningful margin expansion and adjusted EBITDA above the top end of our first quarter preview range. Since our last earnings call on February 24th, we secured gross bookings of 1.9 gigawatt excluding domestic India volume. We booked 1.4 gigawatts into our key US utility scale market at an ASP of approximately 35 cents per watt inclusive of applicable adjusters. Turning to slide 5, our technology strategy is anchored in the premise that customers value not just nameplate efficiency but lifetime energy production as well. CURE is central to that strategy. Extensive testing data has validated our expected bifaciality, advantage, temperature coefficient and degradation profile, with CURE anticipated to deliver up to 8% more lifetime specific energy yield than Crystal Silicon Topcon. I'm pleased to report that CURE launch is complete in Pearisburg and the first Series 6 line is ramping. Consistent with expectations, CURE is scheduled to be replicated across the Series 6 and 7 fleet through the first half of 2028, which if achieved, supports the potential realization of up to 0.6 billion of additional revenue from technology adjusters in the backlog, with the majority anticipated in 2027 and 2028. Turning to Slide 6, we produced 4.3 gigawatts of modules in the quarter, with approximately 3 gigawatts from our U.S. facilities and 1.3 gigawatts from our international fleet. Our U.S. facilities operated at approximately 96% utilization. South Carolina finishing facility is on track for production start in the second half of 2026 with equipment installation beginning this quarter. Upon completion, this facility is expected to provide finishing capacity for Series 6 modules initiated at our international factories and optimized freight tariff and domestic content outcomes while benefiting from Section 45X Module Assembly Tax credits. Our international facilities in Malaysia and Vietnam continue to operate at a significantly reduced utilization consistent with current trade Dynamics and lower ASP expectations for internationally produced modules. Turning to slide 7 our competitive position in the United States and India continues to strengthen, underpinned by differentiated technology, a domestic manufacturing footprint and bill of material, and independence from Chinese Crispin silicon supply chains in the United States. Headwinds for Crispin silicons continue to build in our view, including trade remedy enforcement, indications of restrictive fiat regulations, and the intellectual property litigation actions we have discussed on recent calls. Our IP specifically, in March, the US International Trade Commission instituted our Section 337 investigation, with respondents representing a significant share of top 10 modules currently imported into the United States. We expect an initial determination within approximately 11 months and final decision within 15 months. In India, our presence reflects the same strategic logic that underpins our US Manufacturing investment, energy security and supply chain independence. The policy framework, including the existing improved list of models and manufacturers or alm and the anticipated implementation of the ALM at the cell level as well as domestic content requirements, currently favors vertically manufacturers such as First Solar. Near term demand is supported by both utility scale and distributed solar applications, including agricultural land developments where our CADTEL Technologies energy yield in hot humid conditions is a meaningful differentiator. Overall, our differentiated technology, our domestic manufacturing footprint and our independence from Chinese supply chains are attributes that are increasingly valued by our customers and we remain well positioned to deliver on our 2026 commitments. I'll now turn the call over to Alex to discuss our bookings, financial results and outlook.
Mark Widmar (Chief Executive Officer)
Thanks, Mark. Beginning on Slide 8, as of March 31, 2026, a contracted backlog was 47.9 gigawatts, an aggregate transaction price of 14.4 billion, exclusive of technology adjusters with deliveries through 2030. During the first quarter we sold approximately 3.8 gigawatts, recorded gross bookings of approximately 1.7 gigawatts, recorded debokings of 0.1 gigawatts in India, our guidance assumes that production is largely sold domestically in a book and bill market at near full capacity. In the first quarter we sold approximately 1 gigawatt in country at an average selling price of approximately 20 cents per watt in the United States. Our domestic production is substantially committed through 2028 under existing contracts, resulting in relative pricing clarity through this period. We continue to take a highly selective approach to incremental US Bookings as we await the outcomes from current policy and regulatory matters, in particular the pending 232 polysilicon derivatives tariff decision and proposed fiat rulemaking. During the first quarter, our gross bookings of 0.9 gigawatts were at an average selling price of approximately $0.34 per watt inclusive of applicable adjusters. With respect to our international fleet, Demand for Series 6 modules produced end to end in Malaysia and Vietnam remains constrained, which is reflected in the reduced production mark mentioned earlier. Turning to slide 9, net sales of 1 billion were a record first quarter for the company and grew 24% year over year. This was driven by a 31% increase in volume partially offset by lower average sales price reflecting a higher proportion of India deliveries. Our gross margin in the first quarter was 47% and expanded approximately 6 percentage points as compared to the first quarter of 2025. The drivers were primarily a higher volume of modules qualifying for section 45x tax benefits and significantly lower sales rate costs including lower detention and demurrage. On a per watt basis, sales rate costs were approximately half of first quarter costs last year at approximately 1.7 cents per watt. Furthermore, as part of our plan to rationalize warehouse costs to approximately $100 million by 2027, we delivered a $22 million sequential reduction in warehouse costs from Q4 2025. On balance, these savings were partially offset by a lower average sales price due to higher mix of India sales and increase in tariff costs year over year. Operating expenses for the quarter were 141 million including R&D of 67 million, up 15 million year over year, primarily reflecting perovskite development and ongoing cure launch work. Adjusted EBITDA was 520 million above the high end of our first quarter preview range of 400 million to 500 million. Adjusted EBITDA margin was 50%. Net income was 347 million, up 65% year over year with diluted EPS of $3.22. Moving to Slide 10, we ended the quarter with $2.4 billion of cash, cash equivalents, restricted cash and marketable securities and a net cash position of 2 billion. At the high end of our targeted resilient net cash range of approximately 1.5 to 2 billion. Operating cash outflows of 215 million reflected normal first quarter working capital dynamics, a meaningful decrease from outflows of 608 million in the first quarter of 2025,
Alex Bradley (Chief Financial Officer)
capital expenditures were 119 million, primarily for our South Carolina finishing facility. We also completed a 45 million scheduled principal payment on our India DFC loan. Turning to Slide 11, our full year 2026 guidance remains unchanged. For the second quarter, we expect volume sold between 3.4 and 4 gigawatts, adjusted EBITDA of 400 to 500 million. In summary, our first quarter performance and reaffirmed guidance for the full year reflect the strength of our strategy of reshoring and scaling domestic manufacturing, progressing our technology roadmap, enforcing our intellectual property, and maintaining a selective approach to new bookings in light of key pending trade and policy determinations. With that, we conclude our prepared remarks and open the call for questions.
OPERATOR
Operator we will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one. Again, we ask that you pick up your handset when asking a question, and if you are muted locally, please remember to unmute your device. Your first question comes from the line of Brian Lee from Goldman Sachs.
Brian Lee (Equity Analyst)
Hey guys, good afternoon. Thanks for taking the questions. Just had two here. First on the module gross margins, I think it's around 7% in Q1 when we adjust out the 45x even with the high India mix. So curious. You know the guide for Q2 implies margins are flattish. Why not more improvement given some of the sequential improvement in freight costs, warehousing, et cetera. And then what kind of tailwinds maybe help into 3Q and 4Q for the margins beyond just volume growth. And then on the ASPs maybe I'll just squeeze in the second question here. This could be nitpicking, but on slide 8 you show 900 megawatts of us both bookings 34 cents in Q1 you mentioned 1.4 gigawatts since the last quarter at 35 cents. So maybe implies recent bookings March and April are higher at 3637 cents per watt. Anything to read into that? What kind of customers engagements and discussions are you having here more recently out of more policy certainty? Thanks guys. I'll do the ASP first Brian and then Alex can talk through the gross margin. Aspy's yeah, so so the 1.4 is is call to call. So that's a little bit of maybe a clarification there. So which would include half and half. So half of that happened before the quarter end. All that happened after the Fed call, but half of it happened before the Quarter end, the other half have happened after quarter end and the average ASP for the call to call volume of that 1.4 was, was $0.35. One other note to include in there is that there's about another 700 or so. That's an option. We're seeing a lot of M and A activity. We're seeing a lot of look, what's great about First Solar, we've had very strong strategic partnerships with very competent, obviously well capitalized partners and they're actually seeing a lot of development acquisition opportunities. Actually talking with team about another deal right now that one of our customers is actually in the process of acquiring. It's looking for incremental volume to support that, that acquisition. So what happened was we booked a deal for about 700 megawatts. Our customers actually now in the process of, of looking to acquire another development asset of which then they would exercise that option which would have to be exercised here over the next several quarters upon completion of that acquisition. So what I would just say, you know, there's still a lot of, a lot of momentum, a lot of activity going on. Brian, From a market standpoint we're being very disciplined as we have in the prior quarters with how we're engaging the market and how we're seeing through pricing.
Mark Widmar (Chief Executive Officer)
Yeah. So still good momentum discipline on our part, trying to realize good ASPs, which I think we did here in the last, I call it eight weeks since the last earnings call.
Alex Bradley (Chief Financial Officer)
Brian, on the gross margin. So if you think about India on an aggregate sense per-watt or dollar contribution basis, it's certainly lower than the U.S. if you look at where India's pricing today on a gross margin percent basis, it's not materially different to the US So despite having a higher India mix on the percentage basis, gross margin basis, not a material impact. If you look at the full year guide with 7%, we haven't changed the guide. That still holds and that's right where we came in, excluding IRA benefit in Q1 as you think through going forward next quarter, we're guiding to the same guide that we had in Q1. It's relatively flat, which implies the second half is going to be stronger. Incremental volume should be beneficial to gross margin. There's a little bit of value on the fixed cost side. The other piece in terms of the back end of the year is that right now our assumption on tariffs is that the Section 122 tariffs carried through for the 150 days from announcement takes us through to the July time frame. After that we're not modeling tariffs beyond that for finished goods coming in. Right. There's still other tariff impact in there on the 232. Now that's the modeling assumption we have today, given uncertainty around what could happen. As you probably aware, the Trump administration has launched several 301 cases with the intent, we believe, to try and replace the 122 with that 301 later in the year. But as of now, we're not modeling that. So the guide has stayed where it is. The guide assumes no tariff replacement back end of the year. That would imply you might get some incremental gross margin. However, if we do see additional tariffs, we'll reflect that in a guide later on.
Mark Widmar (Chief Executive Officer)
And I think maybe one of the things too, just around operationally quarter on quarter from a gross margin standpoint, you know, we will be running, we ran Malaysia, Vietnam at higher utilization rates in, in the first quarter than we anticipate running in the second quarter. So you're going to see more underutilization charges in the second quarter. So trying to get to your question, Brian, about sequential gross margin performance. We will see a little bit of headwind in the second quarter because of the lower utilization rates for Malaysia, Vietnam.
OPERATOR
Your next question comes from the line of Julian demoulin Smith from Jefferies, please go ahead.
Dushant
Hey guys, this is Dushant here for Julian. I guess two quick ones. Could you quantify the amount of adders, I guess on that 34 or 35% ASP, is it like 2-3 cents that you discussed before? And then second, real quick one, how do you think about the Southeast Asian capacity going forward? Going forward. Thank you. I'll take that. Yeah, I'll do the adders and Alex, you can talk to Southeast Asia thought process where we are on that. So one of the things is
Mark Widmar (Chief Executive Officer)
now with the launch of Cure as an example, you'll see it's kind of what I want to make sure people understand is the product which we're going to price now going forward, given that Cure product is being launched, is going to be the technology which we anticipate to deliver and its full entitlement. And if you look at the bookings that we reported, call that 1.4 gigawatts since the last earnings call, half of that volume actually sits out in 2029. So it's encouraging. We're starting to see more momentum in the outer years and that's a Cure product that we expect to deliver. And so when you look at the adder and that in some cases the volumes that we're seeing right now there are no adders because we're pricing the technology. Therefore you won't see an add or two to that deal. And so when you look at the blended average of the adder, the entitlement of the adders are still call it 3 cents or so. But half of the volume that we booked did not have adders on it, the other half did. So the blended average of the adder is going to be, you know, call it a penny and a half or something along those lines. But I think what we'd like to be able to do as we move forward, especially now with the launch of cure, we're just, we're pricing the technology, we're going to deliver the technology, we're going to price it. All the energy attributes will be embedded in the base price. We're kind of still in that transitionary period. We're going to see some contracts that potentially have the combination of two. The base price being our current semiconductor, which we refer to as QED plus adder. But for the windows of which we for sure are going to be delivering the CURA product, we'll just price it as the contract. And you won't necessarily continue to see the adders. I just try to make that clarification. So as we transition in that direction, you're probably going to see less volume with adders on it and just full entitlement of the technology being priced.
Alex Bradley (Chief Financial Officer)
As it relates to Malaysia, Vietnam, we talked on our previous call about maintaining an option around that capacity and we're still doing that. If you look through what we're waiting, I think a large part of that is policy clarity around the 232 which really could spur potential demand around the fully finished international product. If you go back to the original guide, we had $115 to $155 million of underutilization costs that was a function both of Malaysia, Vietnam underutilization running at very low capacity through the year, as well as some of those costs associated with the new finishing line that we're bringing up. So right now we're continuing to maintain that near term option. We'll continue to evaluate that likely. The decision point we're waiting on is policy clarity around the 232 which we expect most likely to come in second quarter of this year.
OPERATOR
Your next question comes in the line of Christine Cho from Barclays. Please go ahead.
Christine Cho
Good evening. Thank you for taking my questions. I actually wanted to know if we should think that there's an impact from the section 232 changes. On steel and aluminum for the Southeast Asian imports, I was under the impression that aluminum might be less than 15% of the weight of a full module. But now that you're going to be just importing just the front of the module, like how should we think about that? And then I think you also said on the last call that 5 gigawatts of the backlog was international modules was the plan just to mostly import that at the beginning of the year and it tails off at the end of the year. If you could just talk about the cadence of that as well. So I got the aluminum one. Repeat your second question. Do I make sure I have it? My second question. The 5 gigawatts of backlog, I thought that was the international portion, was it not?
Mark Widmar (Chief Executive Officer)
Yeah, yeah, no that's about right. I think that's, that's approximately number. So yeah, so that's the, that was entering the year we had about 5 gigawatts of S6 international backlog. And so from there your question was, was the plan to mostly import that at the beginning of this year? Oh no, no. So okay, I got it now. Sorry, that's a piece I didn't, didn't have. So yeah, that, that 5 gigawatt of backlog on S6 International was a multi year backlog. That those shipments would go across 26, 27 and into 28. So that was a multi year. So we, we will run that production to meet that demand. That of that portion of the backlog, call it a little bit more than 25%. Around 25% it would be for this year. The balance would sit in the outer years. As it relates to that on the 232. Yes, aluminum is still included in the tariffs for 232. I think part of your question was as well, what happens with the semi finished product that comes into the US that will come in, the glass will come in obviously without the aluminum frame. As of now we will continue to import the aluminum frames into the US and because they're continuing to be imported they'll be subject to the applicable rates associated with the 232 for aluminum. So anyway, yes, 232 still applicable for aluminum based on the classification of the product we're bringing in. And no real change to that just because we're bringing in a semi finished product from Malaysia.
Christine Cho
Okay. And then you guys have, you know your, you guys have been doing a lot of India volumes in this quarter and the full year assumes full utilization. I just saw that there was like in one of your disclosures about India's proposals. There's a proposal in India to increase the minimum efficiency of PV modules for manufacturers to be included in the alms beginning in 2027. Could you talk through exactly what's on, going, going on there and what your options are to work around it? I realize that it's still just a proposal, but
Mark Widmar (Chief Executive Officer)
yeah, a couple of things. There's a lot of moving things that are going on in India, even including the requirements by 2028 to have a qualification of the wafer being domestically manufactured in India in order to qualify for any projects that actually connect to the grid, the federal grid or the state grid. So that's moving as one of the moving pieces that will, I think further enhance our opportunity to continue to support the Indian market given a vertically integrated model. The other one is it relates to the consideration for the efficiency threshold. We will be launching Cure beginning of next year in India. So our first Series 6 facility that we'll launch in India will be Pure, which will give us an opportunity to improve the efficiency of the technology as well as continuing to enhance the energy attributes. Better bifaciality, better temperature coefficient, better long term degradation rate. And as we continue to work with MNRE, in particular in other parts of the administration and continuing to inform them and educate them on the value the attributes of energy, which is also what our customers pay for energy not labeled efficiency. We continue to have very good and constructive dialogue in that regard. But I think the key enabler to make sure we manage through any potential revisions to those requirements will be the launch of our next generation technology of Pure in India.
OPERATOR
Your next question comes from the line of Chris Dendrinos from RBC Capital Markets. Please go ahead.
Chris Dendrinos
Yeah, thank you. I just wanted to follow up on the earlier question from Jeffries in regards to the Southeast Asia offtake agreement. Can you maybe walk through a bit of the possible decision tree here depending on I guess, the tariff outcome or an offtake agreement, how you're thinking about that facility and when would we have a potential decision as to what, what you all do longer term. Thanks.
Alex Bradley (Chief Financial Officer)
Yeah, I mean right now there's, there's ample demand for the product at a certain price, but when you factor in the tariff implications of bringing that product in and then the risk allocation around that tariff, it's not necessarily the right risk profile for us to take today. Depending on an outcome of a 232, you could potentially see much higher pricing or risk tolerance from buyers whereby we'll be able to more appropriately price that product and more appropriately allocate the risk around changes in tariff policy, which would then enable us to be comfortable long term contracting that product. So a lot of it depends on availability of supply in the US and where tariff and risk can be allocated. And so we think the 232 is most likely the main determinant of that. The outcomes there could be we continue to run that product at full capacity end to end and ship fully finished goods into the US it could be that there's demand, we could add an incremental finishing line in the US and finish that capacity here, or it could be that neither of us occur and then we're into a potential shutdown of that capacity. So those are really the pieces we're looking at.
Mark Widmar (Chief Executive Officer)
Yeah. And one thing maybe to help remind everyone we showed in the last earnings call. So historically we've had about 7 gigawatts of capacity between Malaysia and Vietnam. Okay. Half of that is now going to come to the US to support our South Carolina finishing line. So three and a half of that. That leaves, you know, the other three, three and a half. Now what we indicated in the last earnings call, about half of that three and a half is, is largely no longer available because we're moving some of that back end capacity to the US to support our Perovskite pilot line. So Perovskite full size series 6 pilot line will be available in 2027. So we lose the back end capacity as a result of that. We're losing some of that throughput for the facility. So when you really look at how much of the Malaysia facility of that three and a half gigawatts that would be available, which would be fully manufactured, assembled modules to be shipped into the US there's only about, call it 1.8 gigawatts, maybe closer to 2 of real capacity. So what we're talking about is from a full size finishing module capacity perspective, there's slightly less than 2 gigawatts that is in play. That will tether back to a 232 decision point. So I just want to put that in perspective. It's as you think through your analysis and assessment of Malaysia, Vietnam, half of it's already going to be coming to the US as a semi finished product. Half of it has already been. Capacity has been reduced because we're moving the back end tools to help support our Perovskite pilot line. And then now we're kind of still with about slightly less than 2 gigawatts in Malaysia, Vietnam, that will be tethered back to whatever decisions made with 232.
OPERATOR
Your next question comes from the line of Phil Shen from Roth Capital Partners, please go ahead.
Phil Shen
Hey guys, thanks for taking my questions on the 232. Was wondering if you might be able to share a little bit more color on what the framework of that decision might be. I think we published earlier this week that there could be a minimum import price in the 38 cent per watt kind of level. And so does that resonate with you guys at all? And on your slide number seven, you talked about the timing being Q2. You know, we've seen this push a bunch, right? It was supposed to be year end 25, but then the shutdown happened and a bunch of other reasons have driven this a little bit later. And so as we are a month in to Q2, what's the confidence level that it comes out in May or June. And then on the technology front, Mark, I think you just talked about a full scale line for UPSC in 2027, which is really interesting. And so I was wondering if you could give us a little more color on that. What kind of costs are you seeing? And then you know, is that, what's the, the base? I gotta believe it's CDT on the bottom cell and then perovsky on the top cell, but just any other color in terms of, you know, efficiency, durability, etc. Thanks. Yeah, so. So Phil, on the 232 and the framework, I mean look, there's still a lot of moving pieces, right? What I, all I can say right now is that the engagement that we're having with the administration and the structure of which we are trying to propose, which again is not a percent, it's, it's basically a cents, you know, per watt in the cell or cents per watt on the, the module or could include, you know, a minimum import price. To your, to your point, the feedback we continue to get is very positive to looking at that as the best way to address the polysilicon and its associated derivatives. So it's good positive feedback. But Phil, as you know how these things play out, they, they continue to evolve. And so we have to stay as well connected as possible to continue to advocate and advocate and advocate for, for that type of position. But what I would say is at least is it's encouraging as it relates to the timing. Similar. You know, the feedback that we are getting is still a resolution, you know, by the end of this quarter. You know, does it move into early Q1? Potentially, but it's all dependent on Other events that happen. Right. There's always the, I think the intention is that they know they need to bring this to a conclusion. It's important and they need to communicate an outcome. But as you know, Phil, these things can always move. So, you know, is there a level of, you know, certainty for the quarter? What we just represented in terms of the slide is, is the, you know, information, the best information we have and what our expectations are based on those communications around an outcome and communication around 232.
Mark Widmar (Chief Executive Officer)
The. On the technology side. Yes. So we, we are, you know, currently in, in a timeline that would have us running a pilot line in, in 2027 for, for Perovskites. The cost piece of it, you know, we, I'm not going to get into the specifics of that, but that pilot line, which is a 1 GW pilot line by definition is not going to be an HVM type of cost entitlement. Right. Because in order to get cost out, you need to run high throughput and scale. Right. You know, that's like if you go back and if you, if you look at when we went from our Series 6 factories to our Series 7 factories there, you know, we tripled the output effectively and we managed it with the same headcount. So no real dramatic change to headcount. And that helped drive cost out significantly. And so at 1 gigawatt you're going to be sub optimized and cost is going to be higher. But for an initial product, to get it into the market and to get field validation and customer feedback and all the other things that we need, you know, we think it's appropriate to do that upon, upon launch. And then as we continue to evaluate, we'll, we'll move into a scaling mode. But again, it's going to be a higher cost product. There's, there's no doubt about it upon launch, you know, as it relates to the, you know, construct of what the product is and is it a single junction is a tandem. I mean, you know, there's, we're looking at two different paths. You know, we're still evaluating what we believe is the right launch product. I think the most important thing to do to get something in the field is to validate the performance of the Perovskite. You know, if you can do that and reduce some complexity of thinking through the additional challenges of, of integration of the a tandem construct. Because you have, you know, this you have two different products that have different electrical properties, right? Different temperature coefficient, you know, as, as an example, and different Electrical properties, voltage, current, go on, you know, to try to deal with the construct of matching those two different semiconductors and optimizing them and harmonizing them at the module level so they perform as effectively a system, if you want to refer to it as such. You know, there's a level of complexity around that that I'm not sure it's worth the effort initially because what you want to do is get the product in the field, validate its performance, validate its, its degradation, validate its, you know, performance in all forms of conditions. Right. Which would include open circuit, how does it perform in partial shading? You know, so there's a lot you can learn and I think the most important thing you want to learn is at the prostate level. We all know how, whether the, you know, tandem construct would be a Perovskite with a catal modular, you know, prostate with it with a silicon bottom cell. You know, those you can learn and evolve. But what you really need to do is validate the durability and viability of the prostate and it can perform in the field and be a bankable product and can hit the long term performance objectives that it's going to be held to.
OPERATOR
Your next question comes from the line of Vikram Baghri from Citibank. Please go ahead.
Vikram Baghri
Good evening everyone. My first question mark, probably for you. We understand that the market is for contracting panels at 33 cents a watt or higher is not as deep. Customers are hesitant in pricing the section 232 risk as of now. I was wondering like, once it comes out, based on your assumption sometime in late 2Q, how quickly can you move to book volumes? Put in another way, how much demand is waiting for Section 232 to come out? What sort of like, you know, what
Mark Widmar (Chief Executive Officer)
should we see or look for in bookings after, immediately after the section 232 comes out? Well, look, I think there's this, some unknowns in there as well. I mean, once it gets communicated, then the other is to what extent is what is the impact? Right. And that'll be, you know, a key component of how much volume and how quickly. I mean, what, what I will say is that we, you know, we have some customers and that are looking at multiple gigawatts of volume and, and they're waiting. And what we've also said to some of those customers that once this gets communicated, depending on what the outcome of that communication is, it could have an impact on the current price that we're at least negotiating. So, you know, the risk we run is that it ends up being lower than anticipated. The risk they run is it ends up being higher than anticipated. So I think there's quite a bit of demand there that, you know, should provide an opportunity for us to move through and to book that over multi, you know, a month, you know, period of time. But it really, it depends on the outcome and that's really what the, you know, where you got a bit ask right now, that's what it relates to is what do we expect that outcome? You know, we're trying to create a price point we think that's reflective of a midpoint and we'll see what comes up. If we're wrong, then, you know, we may see a little bit of ASP pressure and if we're right, we may see a little bit of upside relative to, you know, that that marker we have engaged the market with right now.
OPERATOR
Your next question comes from the line of Colin Rush from Oppenheimer. Please go ahead.
Colin Rush
Thanks so much. You know, it's a two part question. So first, you know, as you move from Series six to Series seven with Kir, can you talk about the key technical elements that you guys are working on right now and things that we should be watching for for success and can you talk about any sort of impact that you're seeing from the incremental capacity, you know, domestic capacity that's coming online to some of your pricing negotiations? Yeah, look, the, from a technical standpoint, Series six to Series seven isn't really a significant technical challenge. What it is though is because it's just a form factor change for the most part. Right. We are for the Series 7 launch. So right now, you know, we are for the, the front contact buffer. We actually are taking our existing TCO glass and then we're actually depositing the front contact buffer for Series six. But for Series seven, our plan would be because we've been working with our glass suppliers to allow them just to do it within their facility. So we no longer will just get our standard tco, we'll get the glass will also be included, include the revised front contact buffer that we need for procure. So that'll simplify the factory operations from that standpoint. But really it's just the difference of the size of the tools, you know, so the tools that, you know, there are a couple new tools that we've had to add. It's because the B cam, best known method and process is different for cure and our existing product. And so there are a couple new tools. Again, those are first of a kind tools that have been you know, designed inspect for a smaller form factor product in series six. So we have to now operate those tools, season those tools to get them to the performance level that we need for a different size form factor. So it's not as much of a technical challenge, it's just that there's a slightly different, you know, process that we're using because in series six and at least the launch we're doing the, the front contact buffer. With series 7 we won't be doing it. And then the difference in size of the tools is really what, what the real challenge is. So which, you know, we're working through that. We're validating all that right now and we're going to go as fast as we can. You know, once we get comfortable with validation, a lot of that will move forward and try to replicate as quickly as we can across, across the fleet. You know, the, the new, new capacity. Not, you know, so if you exclude our fully integrated capacity between, you know, Ohio, Alabama and Louisiana, the new facility and in South Carolina is going to be semi finished product. So what's nice about it is, you know, It's a Series 6 form factor. It does have domestic content, but doesn't have as much domestic content as the product that we manufacture in, in Ohio. But it creates a nice opportunity to blend the two together for our customers. You know, they get value out of that as well. You know, it does sort of create an opportunity to be a little bit more competitive on pricing. It creates an opportunity to create more domestic content value to our customers and therefore enabling broader portfolio of projects that can benefit from the domestic content bonus which is extremely valuable to our customers, especially on the ITC side, which in some cases we're talking at the project level, 15 or 20 cents or more of value to our customers to enable that bonus. And so it's a nice way to sort of enhance and further create value to our customer's portfolio by enabling them to see higher realization against domestic content bonus for ITC in particular. Your next question comes from the line of Praneet Satish from Wells Fargo. Please go ahead.
Mark Widmar (Chief Executive Officer)
Good evening. Thanks. With the IPA tariffs repealed and import tariffs on, on India produced modules down to 15%. Just seeing how are you thinking about selling the India capacity into the US versus selling it in the Indian market. Is that something that you're still considering? Maybe if we get a positive 232 outcome and then to the extent that you are, what's the lead time and retooling cost that would be required to enable that and then just a quick housekeeping question on the, on the 1.7 gigawatts of bookings this quarter are able to break out, roughly how much of that is from U.S. capacity versus international. Thanks. The, on the, the India look. I mean right now there's a lot of demand in India and we just sold a gigawatt last last quarter. And when you look at the actual gross margin on that product, effectively, you know, it's the highest gross margin that we have, you know, including the benefits of 45x. So the gross margin is on a percentage basis is obviously attractive and the changeover is always downtime. Even though we try to optimize to make it more efficient to change from a fixed tilt product to a tracker product, it still is not efficient to do that. So we are right now looking at this from a lens of let's just keep running that product because of the demand that we're seeing at least through the first half of the year. Q3 we see a little bit of softness generally in India and then you'll see a stronger Q4. So there may be a little bit of volume in Q3 assuming, you know, the tariff environment stays where it is. The challenge with, you know, the 122 expire at the end of July. So we're going to be looking at whatever tariff environment would be enduring after that. I don't, we have no idea what will happen with the 301s and so we, you know, it's kind of a watch card. We'll see what happens. We will be bringing some volume over. We're talking, you know, tens to, you know, low 100 megawatts or so of whip share product from, from India and bringing that into the US and finishing here in the US we're doing some of that the first half of the year to help enable demand here in the US market. But yeah, it's, it's a, it's, you know, something we continue to evaluate. I just think we, we just don't want to until we have a better understanding of what the long term tariff environment is going to be because again, we don't know after the 150 day window for the 122 what exactly tariff environment will be in. I think for now we're going to focus on a market that has very strong demand and continue to support it from that standpoint.
Alex Bradley (Chief Financial Officer)
Bernice Housekeeping. Question of the 1.7, the 0.9 was US and 0.8 was India. Bookings.
OPERATOR
Your next question comes from the line of Maheep Mandaloy from Mizuho. Your line is open. Please go ahead.
Maheep Mandaloy
Hey, thanks for the question.
Alex Bradley (Chief Financial Officer)
So, just maybe just on housekeeping on the first half of the second half. Cadence, if I look at the EBITDA versus the volumes, looks like the EBITDA is 36% in the first half, but 44% of the volumes. Just trying to understand, is that because of India shipping is higher in the first half, or is it sgna, which is kind of skewing the EBITDA in the first half, second half, yeah, it's mostly driven by the India volumes. As Mark said, we had a strong Q1 for India. It will drop down in Q2, Q3, potentially pick back up in Q4. But as of now, the guide assumes that imbalance, which is why you're seeing that.
OPERATOR
Thank you. Your next question comes from the line of Joseph Osha from Guggenheim Securities. Please go ahead.
Mark Widmar (Chief Executive Officer)
Hi. Thank you. I'm still trying to understand the composition of this 3.5 gigawatts in South Carolina. Are you saying that, for starters, is perovskites part of that? And then you're saying that absolutely, no matter what happens, we're going to run one gigawatt and change the Series 6 through there, and the rest is optional. I'm trying to put together where this 3.5 comes from. Thank you. Yeah, thanks for that question, Joe. That 3.5 in South Carolina is our cure or will be our cure product. And series six product has nothing to do with perovskite. So it's going to be product that will be started. Think about it. Just basically the. The substrate glass with the deposition on it with cell scribing, and then shipped to the US to be finished, which will include the COVID glass, junction back junction box, the frame interlayer, all the other stuff that's got to be added to it. Right. So that. That's what that product is. Right. So it is a cattail product. Okay. In addition to that, we will be launching a pilot line next year, which we communicated this as well on our last earnings call. You know, we made the announcement that we acquired an IP or Oxford for Proskites, which enhances the IP that we already have to manufacture that product here in the US and we will be starting that with a pilot line that will have up to a gigawatt of capacity. That pilot line will actually be in our Perrysburg facility. So we have existing facility space in Perrysburg that we will be integrating and using for that pilot line. And we'll be leveraging some of the capabilities that we already have for backend processing and what have you in Perrysburg. So that's what that means. Right. So it's a pilot line. We still think of it as development, as a gigawatt of capacity. We will be manufacturing product, we'll be deploying it into the market, getting test data validation with customers and those types of things. South Carolina will be a cattail product, started in Vietnam, Malaysia, finished in South Carolina.
Alex Bradley (Chief Financial Officer)
Maybe just part of the confusion there. So if you think about the original 7 gigawatts of capacity we had in Malaysia, Vietnam, 3 1/2 is still going to be used for the front end that the product then comes to be finished in South Carolina. Of the remaining three and a half, we're using some of those tools. Those tools will then go into the perovskite line in Perrysburg. So that's why the remaining CAD tell capacity in Southeast Asia comes down. But it's not mixing cadcell and perovskite. It's simply saying some of those back end tools will now no longer be used there. They're going to go over to Ferrysburg and be used in that one gigawatt pipeline for Perovsky. Guys,
OPERATOR
our final question comes from the line of Ben Kahlo from Baird, Please go ahead.
Ben Kahlo
Hey guys, I, I just have a, a follow up question and then another one just to Joe's question is do what is the capacity after all that's done? Because I think Mark, you said that you lose some capacity in Vietnam and Malaysia and so I just want to make sure what we have the volume number correct, you know, as we enter next year. And then my follow up question is just on Topcon and your patent and what Tesla is doing and you know how you think about them starting manufacturing here and if that's going to violate your patent. Thank you.
Alex Bradley (Chief Financial Officer)
Yeah, Ben, if you go back to the deck that we presented in February, we gave capacity and production for 26 and 27 and the assumption at that point have not changed to now. So if you look at on a production basis we said for 20, 27 will be around about 19 to 20 and a half gigawatts. So 19.7 I think was the midpoint of production and that's not changed. So if you go back to that deck, you'll see, you'll see the breakout there in terms of geographical location of product.
Mark Widmar (Chief Executive Officer)
Yeah. And then on the Tesla as it relates to our Topcon patent, what we do know is that any of the top gun product and you can see by, you know, the filings that we've done and the number of manufacturers who have produced Topcon and have sold it into the US Effectively, all of those parties have been infringing on our iPad. Okay. If Tesla chooses to go with Topcon, my assessment would be, given what I see in the market, unless Tesla tries to redesign the product such that they would not infringe in our ip, I guess my assumption would be there'll be some form of infringement. Okay, and, and look, I just want to make sure that it's, it's clear that we are more than willing to work with any counterparty to engage in a commercial conversation around the licensing of our ip. We are not prohibiting that conversation. Right. The issue is we just want to be paid fair value. That's also why we license the IP to talent. Talent has demonstrated a willingness to pay fair value for the technology that's enabling the product they're going to manufacture. That's fine, we'll do that with other counterparties. And if Tesla chooses to use an ip, you know, a top cut product that uses our ip, then we'll send it to a commercial conversation with them and happily engage with a conversation of licensing that ip. I mean there's nothing wrong with that and we'd be more than happy to do that. I do think it's one of the challenges that, you know, Tesla's going to have to figure out what technology they go with and how do they get freedom to operate and IP is going to be a significant challenge, at least in my mind as it relates to topcon, because it's, you know, a challenge that, you know, that everyone else here in the US I think has realized as well, in particular as it relates to the strength of our ip, but more than happy to enter into a commercial conversation with them if they choose to do that or want to do that. And we'll figure out a license arrangement that can work for both of them, both parties. Look, I think Tesla getting, you know, establishing capability here in the US market we've always said is we need a robust and resilient domestic supply chain, completely vertically integrated beyond just thin film catal. That's also why we're evolving towards perovskite as next generation thin films. You know, Tesla bringing in that capacity and that capability and creating a domestic supply chain. I think it only further enhances and supports kind of the overall strategic intent around, you know, long term energy independence and national security and having domestic supply chains I think are extremely valuable in both of those regards.
OPERATOR
At this time there are no further questions. This concludes today's call. Thank you all for attending.
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