(1) Is the decision due to significant change in market conditions, change in strategic direction, or both?
The Company’s decision to discontinue the development of a polysilicon production facility at Lianyungang, Jiangsu province was due primary to changes in market conditions. The Company’s strategy will continue to focus on three areas: lowering of module manufacturing costs, development and advancement of our of core technologies, and further development of a strong brand in the marketplace.
Supply-demand conditions in the polysilicon market have changed considerably. The Company believes that it now has greater access to long-term contracts with improved delivery and payment terms for polysilicon to meet its planned capacity expansion requirements in the next several years.
The average price of polysilicon, though remaining high in the short term, is expected to decrease in the long term as a significant portion of polysilicon manufacturing capacity currently under construction becomes available. Long-term contracts now generally have prices that will decline over time. These contracts will allow the Company to reduce its per watt polysilicon costs over time and to expand its margins in the long term.
As a result, the Company does not see the need to commit capital to building its internal capacity for polysilicon production, but will still evaluate investing in other projects opportunistically where attractive economics are offered and that involve notably smaller investment scale.
(2) Is the Company currently evaluating any alternative strategic investments in polysilicon production?
There are no strategic investments currently under consideration.
(3) Under what future criteria may we consider an alternative strategic investment in polysilico production?
A potential investment project that would serve the Company’s best interests in long-term supply visibility and quality by means of a minor shareholding.
(4) Were concerns of equipment supply delivery or recruitment and development of a project management team factors in the decision to discontinue investment?
These were not factors in the decision process.
(5) Does this decision affect the amount of silicon procurement required in 2008 or 2009, or your operating profitability in the upcoming years?
The decision does not change the amount of silicon to be purchased by the Company in 2008 or 2009
(6) Is this decision subject to approval by the Company’s Board of Directors?
The decision was approved by the Company’s Board of Directors on April 11, 2008
Source Trina Solar. 14.04.2008
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