China Wind Systems to Supply Components to Hangzhou Gearbox

China Wind Systems Inc. announced that it has signed a letter of intent (LOI) to supply shafts and gear rims for use in 1.5-megawatt (MW) wind turbine gearboxes to Hangzhou Advance Gearbox Group Co. Ltd, one of the top three gearbox manufacturers in China.

Under the terms of the agreement, China Wind Systems will complete two shaft and five gear-rim prototypes based on Hangzhou Advance Gearbox’s technical specifications. Upon successfully passing the inspection phase, Hangzhou Advance Gearbox Group is expected to purchase shafts and gear rims from China Wind Systems in 2009 for use in its 1.5-MW gearboxes.

Hangzhou Advance Gearbox Group’s current manufacturing capability is 500 gearboxes per year, and total tonnage of shafts and gear rims in a gearbox is approximately 30-35 tons. The current average selling price per ton of forged products in a gearbox is approximately US $2,195. Orders under the LOI are contingent on successful delivery of the prototypes and subject to negotiation as to pricing, quantities and terms of delivery.

“We look forward to fulfilling Hangzhou Advance Gearbox Group’s need for precision wind components by supplying the company with high-quality shafts and gear rims,” said Jianhua Wu, chairman and CEO of China Wind Systems. “Forged products sales are expected to reach US $9 million, which is approximately 55% of projected total revenues in the fourth quarter of 2008. Sales of our forged products for use in the wind power industry are expected to reach US $7 million in the fourth quarter of 2008, which will account for approximately 44% of our total revenues.”


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