Solarfun in silicon wafer supply deal

Qidong, China-based Solarfun (Nasdaq: SOLF) said today it signed three contracts to purchase a total of $230 million worth of silicon wafers from an unnamed Korean conglomerate over a seven-year period.

The news sent shares of Solarfun to an all-time high of $40.19. The stock was selling at $38.69 in afternoon trading, up by $2.70, or 7.5 percent.

Solarfun, which manufacturs photovoltaic cells, modules and ingots, also named Henricus Hoskens as CEO, replacing founder Lu Yonghua, who will continue to serve as chairman.

Hoskens previously held the post of deputy CEO at Taiwan's TPO Displays.

Under today's silicon wafer agreement, Solarfun said it would start receiving the wafers this month, with volumes reaching over 30 megawatts per year in 2011.

"We are pleased to develop a long term partnership with a proven player and look forward to growing our relationship with them in many areas," said Yonghua.

"This contract will be a key factor towards fulfilling our immediate expansion goals of 360 MW in production capacity by mid-2008 and allows us to explore OEM as a possible addition to our business model."

Solarfun said the prices for the wafers would be fixed with a declining price structure throughout the term of the contract.

As part of the deal, the Korean firm will hold options to buy back a certain percentage of the wafers as modules beginning in 2009.

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