Hoku Scientific getting into silicon production

A Hawaiian fuel cell company is to start producing silicon in Iowa for a solar customer in Germany.

Hoku Materials, a division of Hoku Scientific, Inc. (NASDAQ: HOKU) has signed a non-binding Memorandum of Understanding (MOU) to supply solar grade polysilicon to Solar-Fabrik AG of Freiberg, Germany.

Under the terms outlined in the MOU, Hoku would supply polysilicon to Solar-Fabrik over a fixed number of years at pre-determined pricing on a non-cancelable order.

The deal is expected to represent between $120 and $140 million USD for Hoku over a several-year period commencing in approximately two years.

Hoku intends to manufacture the polysilicon at a new facility it is planning in Idaho. Hoku expects to commence construction of its Idaho facility in the first half of calendar year 2007, subject to available financing and other conditions, and complete construction in late 2008.

"Solar-Fabrik has quickly emerged as a strong player in the global module market, and its upstream integration strategy makes them an ideal partner for us," said Dustin Shindo, Chairman and CEO of Hoku Scientific. "We are very impressed with their business strategy and believe that they are well positioned to be a leader in this growing industry."

The MOU reflects the parties' intent to conclude a definitive agreement within 60 days.

Hoku Scientific is best known for developing and manufacturing membranes and membrane electrode assemblies for fuel cells.

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