2. Supply Developments

2.1 Solar grade silicon production

Advanced Silicon Materials Inc., ASiMI announced this quarter that it and Renewable Energy Corp. (REC) of Norway have signed a letter of intent to establish a joint venture at its Moses Lake plant to produce polysilicon for the solar cell industry. Polysilicon is the feedstock used to make silicon wafers. It can be made more cheaply for solar use than that for use in the semiconductor industry because the product requirements are not as stringent.

By agreeing to the joint project, Renewable Energy buys the equipment and facility, and gains the skills of the ASiMI work force in Moses Lake. "The joint venture should become a major milestone to reduce future shortage of silicon for the solar industry. It will also offer an opportunity for the solar industry to grow with minimal impacts of semiconductor market conditions and lead to stabilization of silicon raw material prices," said Reidar Langmo, president of REC.

REC is the main shareholder in ScanWafer ASA, one of the major independent producers of silicon wafers for the photovoltaic industry. Under the initial terms of the agreement, ASiMI's major contribution will be the transfer of the Moses Lake facility. Renewable Energy Corp will supply technology, financing and working capital. Negotiation surrounding cost reductions, definitive agreements and other conditions, including regulatory approvals, will continue for the next few months. A final agreement is expected by the summer.

Komatsu Ltd is considering forming an alliance with third parties to discuss the possibility of using its Washington, USA plant to produce silicon for use in PV cells. The future of the plant is threatened by a slowdown in the semiconductor market. Degussa AG and SolarWorld AG announced in May that they will form a joint venture for the future production of solar silicon. They will pool their competences in developing and establishing a cost-effective technology for the manufacture of solar silicon. Degussa AG holds 51 per cent and SolarWorld AG has a 49 per cent stake in the new company. The objective of the joint venture is to produce silicon from silane, a gas consisting of silicon and hydrogen. The silane will be provided by Deguss AG, a supplier of speciality chemicals.

The decomposition of silane to silicon is carried out in tube-type reactors in which silicon is precipitated from silane gas on the walls of silicon tubes. This technology will be contributed to the joint venture by SolarWorld AG. The company holds an exclusive worldwide license on this process, which was developed by the US technology group GT Equipment Technologies Inc. (GTi) of Nashua/New Hampshire. The joint venture will establish a pilot plant with an initial annual capacity of 800 tons of silicon at the Degussa AG location in Antwerp by 2005. SolarWorld will use up to 85 per cent of the solar silicon for the group's own production of solar silicon wafers, the remainder will be made available to the worldwide solar wafer industry.

2.2 Wafer production

In order to respond to the strongly rising demand for silicon wafers, SolarWorld subsidiary Deutsche Solar is accelerating its silicon wafer production development. Production of silicon wafers will reach a rate of 80 Megawatt (MW) by mid-year and 120 MW by the end of 2002. This is an increase from the original plan of 100 MW by year-end. The company plans 220 MW of wafer capacity by 2004. At the end of April, GT Solar Technologies announced that it will deliver multiple units of its GT-MX225 HEM furnace to Deutsche Solar. The value of the contract is in excess of $6 million.

The HEM furnaces will be installed at Deutsche Solar's facility in Freiberg, Germany, as part of the company's ongoing growth. The HEM (Heat Exchanger Method) is a crystal growth process for growing multicrystalline silicon ingots, which are cut into blocks and sawn to produce wafers. GT Solar Technologies, also announced that it will install a turnkey GT-WAFFAB photovoltaic wafer fabrication line for Baoding Yingli New Energy Resources Co., Ltd. of Baoding, China. This is the first turnkey line GT Solar has sold in China; it will include delivery of multiple HEM furnace units.

The GT-WAFFAB wafer line is part of Baoding's PV project that also will include a cell and module line. Siemens Solar reported that it has expanded its silicon wafer production by 40 percent in the past two years and plans to continue expanding under new owner, Shell Renewables.

ASE Americas celebrated completion of an expansion of its facility in Billerica, Massachusetts. This expansion increases ASE's solar wafer production from 12 to 20 Megawatts per year at the Billerica facility, which is in addition to a 60 Megawatt expansion currently underway at ASE's parent organization, RWE Solar GmbH in Alzenau, Germany. The wafers are produced from molten silicon, grown in thin, hollow octagonal tubes, 20 feet long, using edge-defined film-fed growth (EFG) technology.