SunPower Silicon Demand Spurs New Manufacturing Facility

SunPower Corp. this week announced a major silicon supply agreement topping USD$ 250 million. The deal calls for DC Chemical Co., one of South Korea’s leading chemical companies, to provide polysilicon for SunPower’s solar photovoltaic (PV) module manufacturing operations.

Starting in 2008, the agreement calls for SunPower to purchase approximately $250 million of polysilicon over a four-year period from DC Chemical’s new facility, which is expected to manufacture 3000 metric tons of polysilicon per year. SunPower will support construction of the facility with a series of advanced payments over the next year. DC Chemical’s polysilicon supply will provide a guaranteed source of raw material to make ingots for SunPower’s high efficiency solar cells. This move comes amidst the now widely known silicon shortage situation in the solar PV industry, whereby demand for the raw material (needed for 90 percent of solar panels) is greatly strained. This announcement from SunPower — particularly that the contract fees will help support construction of DC Chemical’s polysilicon production facility – is an example of the solar industry playing a more active role in expanding the raw material supply. “The solar industry will benefit from new entrants like DC Chemical who can enable reliable, high-volume polysilicon supply in the near-term,” said Tom Werner, CEO of SunPower. “This agreement is a major component of SunPower’s silicon supply portfolio strategy.”
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