China Ramping Up Polysilicon Production

Seeks Solar Energy Raw Material Independence

CHICAGO—March 26, 2007. With polysilicon shortages threatening growth in the otherwise booming solar energy industry, China is planning up to eleven projects aimed at developing an independent supply of the key raw material used in producing solar cells by 2011, according to a new whitepaper by THT Research (http://www.thtresearch.com).

Global polysilicon supply falls short of demand by around 3,700 tons per year. “With key polysilicon manufacturing technology owned by a handful of Europe, U.S., and Japan manufacturers, which together produced over 90% of the global supply of 36,000 tons in 2006, China is particularly vulnerable to shortages,” states THT analyst L.Y. Yuan.

“Chinese solar cell makers have generally relied on import – in 2006 over 95% of China’s polysilicon demand was imported. But tight global supply has resulted in price increases, with the 2006 contract price of polysilicon in China reaching US$100 per kilogram, and the retail price hitting over US$300 per kilogram,” explains Yuan.

Beginning in 2000, Chinese companies, led by Baoding Yingli Solar, began to venture into independent polysilicon production. But with the major international polysilicon manufacturers unwilling to transfer their technology to China, local companies were forced to piece together their own technologies for producing polysilicon. The result has generally been an inability to reach economy of scale and manufacturing energy consumption of two to three times international standards.

“By year-end 2006, China domestic polysilicon production had reached just 230 tons, while solar industry demand stood at 4,380 tons,” explains THT’s Yuan. “Nevertheless, in 2007 Chinese companies such as Luoyang Zhonggui, Emei Semiconductor, and Sichuan Xinguang Silicon Industry have begun to develop and expand polysilicon production capacity, and at least eight other projects are planned for the coming years.

“The ultimate goal,” explains THT’s Yuan, “is for China to have polysilicon independence by 2011, with domestic production capacity of 12,660 tons. This goal is being heavily supported by government – both in terms of national laws passed and grants and funding given on the local and provincial level.”

“We see China as a global solar energy leader,” says THT director Y.D. Gordon. “Major solar companies look to China for inexpensive solar cell supply, and the government has had the foresight to focus on developing significant home-grown poly capacity. Whatever balance China strikes in the future between export and development of its domestic solar industry, this space is going to continue to be attractive for investors, which is why THT has a dedicated research team in China focusing on solar energy,” explains Gordon.

See THT’s whitepaper: China’s Solar Energy Industry: Polysilicon 200-2011 for tables and data on China’s polysilicon production. http://www.thtresearch.com

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