Suntech announces 10-year solar wafer supply agreement

Suntech Power Holdings Co. Ltd announced that it has entered into a definitive agreement with MEMC Electronic Materials Inc. under which it will receive solar wafers from MEMC over a 10-year period. The total contract size is $5 to $6 billion over the agreed period with significant growth trajectory of annual supply over the years.

According to the press release, a pre-determined fixed price reduction curve will provide Suntech with competitively priced wafers as it increases its output to meet market demand. As part of the agreement, the company will also advance funds to MEMC in the form of an interest-free loan or security deposit for expansion of MEMC's manufacturing capacity. In addition, MEMC has received a warrant to purchase an approximate 4.9 percent equity stake in Suntech.

"We believe that wafer-based photovoltaic technology will continue to dominate the burgeoning solar energy industry in the next decade. This agreement allows Suntech to continue to maintain our products' cost competitiveness, expand our market share, and focus on our core competency of developing high-quality and low cost per watt PV cells and modules," said Dr. Zhengrong Shi, Suntech's chairman and CEO.