Who wins if the US restricts Chinese solar inverters?

Investing.com -- A reported draft ban on Chinese solar inverter imports could provide a marginal boost to Enphase Energy (NASDAQ: ENPH) and SolarEdge Technologies (NASDAQ: SEDG), though Goldman Sachs said the practical implications are more significant for the utility-scale market than residential applications.

Analyst Brian Lee, who said in a note on Wednesday that Goldman takes no view on the validity of the Reuters report, stated that the Trump administration is drafting a ban on foreign inverter imports over concerns about potential disruptions to power supplies, with the rule potentially finalized as early as this year.

Lee noted the policy "could be revised or not executed at all."

Goldman Sachs said the news is likely more impactful to SolarEdge given its greater market share within the commercial and industrial segment, where Chinese manufacturers Chint and Sungrow together hold approximately 40% market share, up from around 30% in the early 2020s.

Within the residential inverter market, Enphase, SolarEdge and Tesla have maintained approximately 90% combined market share for several years, leaving limited room for Chinese displacement.

The bank said the ban could provide "less resistance to ENPH's strategy shift to enter the C&I market," where the company has targeted 40% market share within three years.

Goldman also noted that both companies are advancing solid-state transformer products targeting the utility-scale market, where Chinese firm Sungrow is currently the market leader, meaning the reported legislation "could potentially enhance opportunities in that market."

Goldman maintained its Buy rating on Enphase with a $57 price target and its Sell rating on SolarEdge with a $34 target.

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