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Global semiconductor company REC Silicon it is closing a major production line at its Butte facility because of higher electricity costs, a move that will cost jobs and signals a potential complication for federal efforts to strengthen supply chains for U.S.-based semiconductor manufacturing.

Specifically, the Norway-based company announced that it plans to shutter its energy-intensive Butte polysilicon business, which produces a solid silicon product used in semiconductors and solar panels. The company said it does plan to maintain “full focus” on the Butte portion of its flagship silicon gas business, which produces silane gas used for polysilicon and electronics manufacturing.

“The decision to shut down the polysilicon business in Butte was very difficult from a human perspective because of the impact on REC’s workforce,” CEO Kurt Levens said in the announcement, which lauded the company’s “resilient and resourceful” Butte workforce.

“We did everything in our power to return profitability to the polysilicon business in Butte, however, forecasts for sustained high electricity costs that are outside of our control necessitated this decision,” Levens continued.

The company says it plans to continue polysilicon production for approximately six to nine months to fulfill existing orders. It didn’t say in its release how many jobs will be affected but notes that it employs 300 people in Butte.

The announcement comes as the administration of President Joe Biden seeks to bolster U.S.-based semiconductor manufacturing using large funding packages authorized by Congress. The 2022 , for example, authorized tens of billions of dollars in federal spending to support semiconductor manufacturing, research and workforce development.

REC says in its statement that the closure in Montana was forced by higher power costs that “will not allow for profitable operations” for the Butte polysilicon production line.

“The company took short-term mitigative measures that included electricity hedging, optimized production, and increased sales prices,” REC said in its statement. “These efforts minimized the losses in the short-term, however, the decision taken is primarily about the mid to long-term viability of a very power-intensive polysilicon process located in a high electricity cost region, particularly relative to alternative manufacturers and regions.”

According to its , REC operates U.S.-based manufacturing sites in Butte and Moses Lake, Washington. The Moses Lake plant was shuttered in 2019 as the Trump administration’s cut the company off from Chinese customers but . The company says in investor materials that it reopened the Moses Lake plant in response to the Biden administration’s efforts to promote “low-carbon value chains” in the U.S. semiconductor industry.

The annual report says the polysilicon production process now used at the Moses Lake facility uses between 80% and 90% less energy than the process used in Butte. Moses Lake, in eastern Washington, is also located near the Bonneville Power Administration’s network of Columbia River hydroelectric dams.  

Much of Montana’s electric grid, including the Butte area, is managed by NorthWestern Energy. NorthWestern spokesperson Jo Dee Black said Wednesday that REC Silicon is connected to the utility’s transmission grid but buys its electricity from a third-party supplier.

Black also noted that NorthWestern has made an effort to expand its generation portfolio by expanding its ownership share in the Colstrip coal generation plant and building a new gas-powered generating station in Billings — decisions that have put the utility at odds with environmentalists who would prefer it to lean harder into wind and solar generation.

“The changing and volatile energy market means NorthWestern Energy’s customers in Montana, especially those that rely on third-party market prices, have too much exposure to the market, risking both reliability and affordability,” Black wrote in an email.

“It is a risk for the state’s economy,” she added.

This story is published by �ԹϺ��� as part of the Long Streets Project, which explores Montana’s economy with in-depth reporting. This work is supported in part by a grant from the Greater Montana Foundation, which encourages communication on issues, trends, and values of importance to Montanans. Discuss MTFP’s Long Streets work with Lead Reporter Eric Dietrich at edietrich@montanafreepress.org.