The wafer manufacturing capacity is being spun off from a subsidiary of Glory Silicon Technology Investments (Hong Kong) Limited, in which Suntech holds an equity investment.
Suntech will acquire the remaining 70 percent shares of the capacity for approximately $127 million (€93.1 million), which is the total consideration after an offset of approximately $80 million (€58.7 million) of liabilities owed to Suntech.
“The acquisition of wafer manufacturing capacity is the next step of our vertical integration, which will enable Suntech to balance dual goals of large scale and low cost,” said Dr. Zhengrong Shi, Suntech’s Chairman and CEO.
“The proximity of the manufacturing facility, operating experience of the management team and ample capacity make this an ideal acquisition for Suntech,” he continued. “Over the next 12 months, we intend to expand internal wafer capacity to 25 percent to 50 percent of our total cell and module capacity. This should enable us to significantly reduce wafer cost, and improve profitability.”
“Going forward, we also plan to leverage Suntech's global R&D resources to drive innovation and efficiency improvements in ingot and wafer manufacturing processes,” Shi added.
Word of the acquisition came just as the Wuxi (China) based company announced that its revenues and shipments increased dramatically during the third quarter, with sales reaching an all-time high.
Net revenues for third quarter of 2010 were $743.7 million (€544.7 million), compared to $473.1 million (€346.8 million) in third quarter of 2009, an increase of more than 57 percent. They were also 19 percent higher than the $625.1 million (€458.2 million) in the second quarter of 2010.
Shipments of PV modules rose significantly, going up 25.3 percent versus the previous quarter and 107.1% year-over-year. Combined cell and module production capacity stood at 1.6 GW at the end of third quarter and should reach 1.8 MW by year’s end, the company said.
Capital expenditures are expected to be about $350 million for 2010.
“The third quarter was a highly productive period for Suntech,” Shi said in a lengthy statement accompanying the earnings report. “Shipments and revenues each hit new quarterly records, and we reached production capacity of 1.6 GW. We are on track to achieve our goal of 1.8 GW cell and module capacity by the end of this year.”
Shi noted that in the third quarter, Suntech continued to diversify its sales globally and participated in high profile solar projects across Europe, the Americas, and Asia Pacific.
In Europe, it supplied a 5 MW project in Thiva, which is one of the largest grid connected solar projects in Greece. In Asia Pacific, the company was selected for phase two of a 44MW project in Thailand.
“We recently opened our module manufacturing facility in Goodyear, Arizona, which will help us to service the accelerating demand in the Americas,” Shi said. “Indicative of our rapid market penetration, we sold more product in the Americas in the third quarter of 2010 than we did in the full year 2009.”
As for the fourth quarter, Suntech said it expects at least 10 percent sequential growth in shipments, with a target of shipping more than 1.5 GW of solar products for the year, which would represent growth of at least 113 percent compared to 2009.
The company’s consolidated gross margin for the quarter was 16.4 percent, down from the 18.2 percent in the second quarter.
The company attributed the sequential decline in gross margin primarily to a small decrease of average selling price, and a marginal increase in the cost of silicon wafers used in production.
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