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Mia Nurmamat

Xiaofei Xu

A United States ban on new foreign-made power inverters has aligned Washington with Brussels in attempting to push Chinese suppliers off Western grids, a shift analysts caution will be neither quick nor painless as a supply squeeze looms in a market China dominates.
The administration of US President Donald Trump last week announced restrictions on new foreign-produced connected power inverters, citing national security concerns.
While the measure did not explicitly name China, suppliers in the world’s second-largest economy are expected to be among those most affected, given they accounted for about one-third of American inverter imports in 2024.
The decision was partly influenced by the European Commission’s earlier move to restrict Chinese-made inverters in publicly funded energy projects, according to Reuters.
Dutch bank ING warned in a Friday report that simultaneous restrictions by the US and EU could raise costs and deepen supply-chain pressures on the American clean energy sector in the medium term, as competition for compliant inverters grows amid tighter European regulations.
Once viewed as simple power conversion devices, inverters have evolved into connected systems capable of remote monitoring and control, making them an increasingly important part of modern electricity networks, according to the US National Renewable Energy Laboratory.
Chinese companies currently dominate the global solar inverter market. Huawei Technologies and Sungrow, the two largest suppliers, together accounted for about 55 per cent of global market share, according to Wood Mackenzie, a UK-based energy research firm.
The moves by the US and Europe appear to be driven more by geopolitical considerations than by technical concerns
Xu Tianchen, Economist Intelligence Unit
Analysts are divided over whether the restrictions reflect genuine cybersecurity risks or broader concerns over dependence on Chinese suppliers.
Alicia Garcia-Herrero, chief economist for Asia-Pacific and the Middle East at French investment bank Natixis, said some Chinese units had reportedly been found to contain undocumented communication modules that could enable remote access.
“At scale, coordinated disruption of inverter-based resources could destabilise local or regional grids,” she said. “The risk is real and grows as these devices proliferate.”
However, Xu Tianchen, senior economist at the Economist Intelligence Unit, said the risk of a single inverter causing large-scale disruption was limited, as the devices were subject to grid standards, isolation mechanisms, access controls and monitoring systems.
“As a result, the moves by the US and Europe appear to be driven more by geopolitical considerations than by technical concerns,” he added.
As Chinese industries move up the value chain, more advanced technology products are coming under scrutiny overseas. The US has also targeted Chinese-made robots over national security concerns, adding to growing trade barriers facing China’s technology and clean-energy exports.
Nevertheless, moving away from Chinese inverters would come with higher costs and could slow some projects in the short term, as non-Chinese alternatives remain more expensive, Garcia-Herrero said.




However, she added that Europe had some capacity to expand inverter production, while the US and its allies had alternative suppliers such as Japan and Israel, allowing policymakers to gradually reduce risks through supply-chain diversification and security measures.
One senior executive at a major European utility firm recently told the South China Morning Post that the company could not manage without Chinese inverters.
China accounted for about 80 per cent of the world’s inverter production capacity, compared with eight per cent in Europe and three per cent in North America, according to the ING note.
“Solar inverters are just one example of a broader pattern where the West faces heavy dependency on Chinese components for its clean energy and manufacturing ambitions,” said Alfredo Montufar-Helu, China-based managing director at Ankura Consulting,
Such bans would help strengthen domestic producers in the US and the European Union, through cutting out Chinese competition, Montufar-Helu added.
For now, China’s dominance in the market remains commanding. Inverter exports jumped 30.7 per cent to US$5.53 billion in value year on year during the first half of 2026 despite falling in volume by 6.1 per cent to 24.7 million units, according to Chinese customs data.
The EU remained China’s largest overseas market, with exports reaching US$1.93 billion, accounting for about 35 per cent of total exports and rising 27.6 per cent year on year.
By contrast, exports to the US declined, with value falling 3.6 per cent to US$121.8 million, while shipment volumes dropped more than 20 per cent.


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As Western governments move to end dependence on world’s top producer, analysts warn rapid decoupling could drive up costs and derail projects


As Western governments move to end dependence on world’s top producer, analysts warn rapid decoupling could drive up costs and derail projects.


Why US, EU curbs on Chinese power inverters risk upending green supply chains

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}As Western governments move to end dependence on world’s top producer, analysts warn rapid decoupling could drive up costs and derail projects

As Western governments move to end dependence on world’s top producer, analysts warn rapid decoupling could drive up costs and derail projects