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Hanwha SolarOne Co., Ltd Message Board

  • greendome2 greendome2 May 7, 2007 1:48 AM Flag

    DO WE KNOW SOLF's COST FOR SILICON?

    ALL,

    Hi!
    Does anyone know the price that SOLF got for the silicon per kg.?

    Look at this for SOEN.

    "Our agent, on our behalf, has entered into a 10-year supply contract for silicon. Thus far, we have a contract with only one supplier. If this supplier is unable to provide us with silicon in accordance with the terms of our agreement and we were unable to find other sources of silicon, or if the price of silicon or the demand for silicon products decreases, our operations could be materially adversely affected.

    Currently, the demand for silicon exceeds the supply. Silicon is a necessary element of our products. In order to help mitigate the risk that we will not be able to obtain silicon, in March 2007 we, through our agent in China, entered into a 10-year supply contract with Jiangsu Photovaltaic Industry Development Co., Ltd. Shipments of silicon pursuant to this agreement are expected to begin later this year. Until that time, we will continue to purchase silicon in the market, if we can. We cannot guarantee that Jiangsu will be able to meet its supply commitment under the agreement. If it were unable to meet this commitment and if other suppliers could not be found, our operations could be materially adversely affected.

    Our agreement with Jiangsu has a term of 10 years and requires us to purchase 100,000 kilos of silicon. The price for the silicon will be redetermined each year. The price for 2007 is $250 per kilo. We are also required to prepay $7.5 million of the total $25 million contract price. If the price of silicon or silicon wafers were to decrease in the future and we are locked into this fixed price, prepaid arrangement, we may not be able to adjust our materials costs and thus, our cost of revenues will be negatively affected for that year. Additionally, if demand for PV products decreases, we may incur costs associated with carrying excess materials, which may have a material adverse effect on our operating expenses."

    ESLR, in their Jan. conference call, reported that buying silicon on the spot market costs $150-$300 per kg. They said most of their silicon was purchased from contracts at $60-$75 per kg.
    So $250 is on the high end and, as this is a long term contract and not from the spot market, this seems like a poor deal. Also, ESLR uses their ribbon technology to reduce the amount of silicon they use. In addition to SOLF, I own ESLR. As email2wang pointed out, SOLF was smart in not completely locking in silicon.

    Again, does anyone know the price that SOLF got for the silicon per kg.?

    If anyone has silicon cost data from the other solar companies, please post.

    Warm regards,

    GREENDOME
    "Providing the Best in Functional Analysis"

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    • Greendoom:

      I don't have this data but I estimated it based on my calcuation: SOLF got it at $132.35/kg. This is based on existing data published by SOLF, as below.

      One kg of silicon (covered to gram) 1,000.00
      SOLF's manufacturing efficiency 6.8g/watt 6.80
      Total watt per kg 147.06
      Total cost per kg, SOLF said cost $2/watt $294.12
      45% cost are silicon $132.35

      Note per SOLF, 80% cost per watt are on raw materials, out of which 45% is on silicon and other 35% is on other materials.

      SOEN will be "dead" for $250/kg, considering it unlikely will get SOLF's effiency on wafter consumption, 6.8g/watt, which is the best I have ever head so far. (better than SPWR's 7.0-7.5g/watt).

      Everygreen's ribbon technology only helps on wafter cutting (using laser) to avoid the wafer waste, e.g. a typical way cut ingot into wafter at 200 micro, the blade itself also at 200 micro, so 50% of wafers are wasted. (Cutting wafer is a low tech, which is why I don't see ESLR has a much of a niche, would rather let the wafer manufactuers handle this).

      In SOLF's case, it orders wafer directly from suppliers, at requested thickness. SOLF currently can handle 185 micron.

 
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