April 18, 2006 – MEMC Electronic Materials Inc., St. Peters, MO, has signed a nonbinding letter of intent for an eight-year, $1.6 billion deal to supply solar wafers to Taiwanese solar cell producer Motech Industries Inc.
Under terms of the agreement, Motech also would transfer ownership of the solar wafer manufacturing business, with annual capacity of at least 120MW, and provide MEMC with an interest-free loan/security deposit to be used for expanding manufacturing capabilities. MEMC also will receive a warrant to purchase a 5% stake in Motech. The deal is expected to be completed in July.
For Motech, the deal ensures a future supply of silicon wafers for solar cell manufacturing, a segment which has seen supplies dry up in recent months, and likely will continue to tighten until new dedicated capacity for the segment comes online at least a year from now. Recent news reports pegged Motech as the No. 9 solar cell maker worldwide, and the top provider in Taiwan with about 50% market share.
MEMC, meanwhile, gets a bigger piece of the fast-growing solar cell market (30% CAGR, according to MEMC CEO Nabeel Gareeb), and takes advantage of solar cell firms’ eagerness to secure supply, and willingness to pay prices competitive with semiconductor buyers. The company also indicated it is conducting similar discussions with other solar product manufacturers for the future supply of solar wafers.