Hanwha Group Vice Chairman Kim Dong-kwan delivers a speech at the company's solar module factory in the U.S. state of Georgia in this April file photo. Courtesy of Hanwha Solutions

Hanwha Solutions Q Cells Division has decided to close one of its two solar module plants in Korea by Dec. 17, following its first-ever voluntary redundancy program to reduce manufacturing jobs here, the company said Thursday.

The decision is in stark contrast to its aggressive expansion activities in the U.S. market. Indeed, it was hailed by U.S. President Joe Biden, Vice President Kamala Harris and U.S. Ambassador to Korea Philip Goldberg for its $2.5 billion investment to build a Solar Hub connecting Georgia's cities of Dalton and Cartersville.

The solar module manufacturing unit of Hanwha Group explained that cutbacks in its production and workforce were inevitable due to the slow demand in the domestic market and oversupply in the global market.

"The shutdown of our factory in Eumseong County, North Chungcheong Province, is intended for the more efficient production of modules," Hanwha Q Cells said in its regulatory filing.

Hanwha Solutions Q Cells Division's factory in Eumseong County, North Chungcheong Province / Courtesy of Hanwha Solutions

Under the presidency of Moon Jae-in who supported the solar power industry, Hanwha Q Cells was recognized for creating jobs here. In 2018, Moon praised the company during his visit to its Jincheon factory in North Chungcheong Province.

However, its earnings in the Korean market have declined sharply, since the election of the Yoon Suk Yeol administration, which has maintained a negative stance toward the sector.

During the third quarter, its operating profit dropped 82.4 percent year-on-year to 34.7 billion won ($27 million). Considering a tax incentive it received worth 35 billion won in accordance with the U.S. Inflation Reduction Act (IRA), Hanwha Q Cells is considered to have virtually suffered a loss.

"Due to the oversupply this year, price falls can be seen throughout the value chain, ranging from raw materials to end products," DS Investment & Securities analyst Ahn Joo-won said. "It will be difficult for the prices to bounce back in a short period of time."

The worsening profitability prompted Hanwha Q Cells to ask its Korean employees to leave. It is unknown how many among its 1,800 Korean factory workers will leave the company.

As the conglomerate has focused more on the profitable U.S. market than the diminishing Korean market, concerns are growing among solar power industry officials that the company may desert the domestic market, which could lead medium- and small-sized component suppliers to close down.

"The global solar power industry and relevant sectors have grown rapidly, but Korea has not followed the trend," Korea Photovoltaic Industry Association Vice Chairman Jung Woo-sik said. "The government should carry out policies for the renewable energy industry."

Hanwha Q Cells said it will concentrate on upgrading manufacturing facilities in Korea, transforming production lines at its remaining Korean factory in Jincheon.

"We will maximize tax benefits from the IRA through enhanced efficiency in our operation," the company said.