(Repost) On the production process of polysilicon
Thread Content
On the Production Process of Polysilicon (I): Major Production Technologies for Polysilicon at Home and Abroad 1. Modified Siemens Method – Closed-Loop Hydrogen Reduction of Trichlorosilane. The modified Siemens method involves synthesizing hydrogen chloride using chlorine and hydrogen (or by purchasing hydrogen chloride). Hydrogen chloride is then combined with industrial silicon powder at a certain temperature to produce trichlorosilane, which is subsequently separated and purified through distillation. The purified trichlorosilane is used in a hydrogen reduction furnace to undergo a CVD reaction to produce high-purity polysilicon. The vast majority of existing polysilicon plants at home and abroad use this method to produce electronic-grade and solar-grade polysilicon. 2. Silane method – Thermal decomposition of silanes. Silanes (SiH4) are produced by methods such as the hydrogenation of silicon tetrachloride, the decomposition of silicon alloys, hydride reduction, and direct hydrogenation of silicon. The resulting silane is then purified and used in a thermal decomposition furnace to produce rod-shaped polysilicon of high purity. Previously, only the Japanese company Komatsu possessed this technology; however, after serious explosion accidents occurred, it stopped expanding production. However, American companies Asimi and SGS still use the thermal decomposition of silane gas to produce electronic-grade polycrystalline silicon products with high purity. 3. Fluidized bed method: Silicon tetrachloride, hydrogen, hydrogen chloride, and industrial silicon are used as raw materials to produce silicon trichlorohydride under high temperature and pressure in a fluidized bed (boiling bed). Silicon trichlorohydride is then subjected to further disproportionation and hydrogenation reactions to yield silicon dichlorohydride, which subsequently produces silane gas. The resulting silane gas is fed into a fluidized bed reactor containing small particles of silicon powder to undergo a continuous thermal decomposition reaction, thereby producing granular polycrystalline silicon products. Because the silicon involved in the reaction in the fluidized bed reactor has a large surface area, it enables high production efficiency, low power consumption, and low costs, making it suitable for the large-scale production of solar-grade polycrystalline silicon. The only drawback is poor security and high risk. Secondly, the purity of the product is not high, but it is generally sufficient for use in solar cell production. This method is a process technology developed in the early years by Union Carbide Corporation in the United States. Currently, only the American company MEMC uses this method to produce granular polysilicon. This method is more suitable for producing inexpensive solar-grade polysilicon. 4. New process technologies for solar-grade polysilicon: In addition to the three methods mentioned above—the improved Siemens process, the silane thermal decomposition method, and the fluidized bed reactor method—for producing electronic-grade and solar-grade polysilicon, several new process technologies specifically designed for the production of solar-grade polysilicon have also emerged. 1) Production of solar-grade polysilicon via the metallurgical method: According to available information, the polysilicon produced by Kawasaki Steel in Japan using this metallurgical method has been used in the world’s largest solar cell factory (SHARP Corporation). A production capacity of 800 tons per year has been established, with all of this output supplied to SHARP Corporation. The main process involves selecting industrial silicon of high purity (i.e., metallurgical silicon) and carrying out horizontal zone melting for unidirectional solidification to form silicon ingots. After removing the parts of the ingots where metal impurities are concentrated as well as their outer surfaces, the ingots are roughly crushed and cleaned. Boron impurities are removed in a plasma melting furnace, followed by a second round of horizontal zone melting for unidirectional solidification to produce more silicon ingots. Once again, the parts with concentrated metal impurities and the outer surfaces of these ingots are removed; after rough crushing and cleaning, phosphorus and carbon impurities are eliminated in an electron beam melting furnace, thereby producing polysilicon of solar-grade quality. 2) Production of granular solar-grade polycrystalline silicon by gas-liquid deposition method: According to available information, represented by the Japanese company Tokuyama, a 10-ton pilot plant is currently in operation, while a semi-commercial production line with a capacity of 200 tons was put into trial operation between 2005 and 2006. The main process involves raising the temperature of the graphite tubes in the reactor to 1500°C; the fluids trichlorosilane and hydrogen are injected from the upper part of the graphite tubes, where they react at this high temperature on the inner walls of the tubes to produce liquid silicon, which then drips to the bottom, where it solidifies into solid granules of solar-grade polycrystalline silicon. 3) Production of solar-grade polycrystalline silicon via the purification of heavily doped silicon waste. According to Crystal Systems in the United States, by purifying the silicon waste generated during the production of heavily doped single-crystalline silicon, it can be used as polycrystalline silicon for solar cell manufacturing, with the ultimate cost expected to be below $20 per kg. (II) Current status of polysilicon production at home and abroad 1. Current status of polysilicon production abroad: At present, the quality of polysilicon produced abroad is sufficient to meet the requirements for Czochralski-grown single crystal silicon used in large-scale integrated circuits, as well as for zone-melted single crystal silicon used in power electronics devices. Moreover, efforts are ongoing to develop new manufacturing processes in order to achieve larger production scales and lower production costs. See Table 1. A few large companies monopolize the polysilicon production technology, maintaining their respective market shares while meeting the needs of the ever-growing variety of semiconductor silicon chips. Table 1: Production Status of Polysilicon Companies AbroadCompany | Country | Raw Materials & Process | Reactor | Product Shape | Product Grade | Production in 2004 | Expected Production in 2005
--- | --- | --- | --- | --- | --- | --- | ---
Hemlock | United States | HCL + industrial silicon | Siemens process and reactor | Rod-shaped | Electronic grade | 7,000 | 7,800
TokuYama | Japan | H2 + CL2 + industrial silicon | Siemens process and reactor | Rod-shaped | Electronic grade | 4,800 | 4,800
Wacker | Germany | H2 + CL2 + industrial silicon | Siemens process and reactor | Rod-shaped | Electronic grade | 4,600 | 5,000
Asimi | United States | SiH4; thermal decomposition process | Siemens reactor | Rod-shaped | Electronic grade | 2,400 | 2,400
SGS | United States | SiH4; thermal decomposition process | Siemens reactor | Rod-shaped | Electronic grade | 2,200 | 2,200
Mitsubishi | Japan | H2 + CL2 + industrial silicon | Siemens process and reactor | Rod-shaped | Electronic grade | 1,600 | 1,600
Mitsubishi | Japan | H2 + CL2 + industrial silicon | Siemens process and reactor | Rod-shaped | Electronic grade | 1,200 | 1,200
Memc | Italy | SiHCl3 | Siemens process and reactor | Rod-shaped | Electronic grade | 1,000 | 1,000
Sumitomo | Japan | H2 + CL2 + industrial silicon | Siemens process and reactor | Rod-shaped | Electronic grade | 700 | 700
Memc | United States | Na, Al, H2, H2SiF6 | Fluidized bed reactor | Granular | For solar use | 1,500 | 1,500
Total | — | — | — | — | — | 27,000 | 28,200
2. Current Status of Polysilicon Production in China
At present, China’s polysilicon production lags far behind that of foreign countries in terms of process technology and scale. It features high raw material consumption, high energy consumption, small scale, low output, inferior equipment, high costs, unstable quality, and weak market competitiveness. As a result, the number of polysilicon manufacturers decreased from 14 in the 1980s to just two in the 1990s (Emei Semiconductor Materials Factory and Luoyang Monocrystalline Silicon Co., Ltd.). At present, Luoyang Zhongsi Company’s plant with a capacity of 300 tons per year is already in operation, while Xinguang Silicon Industry’s plant with a capacity of 1,260 tons per year is under construction. The current status of polysilicon production in China is listed in Table 2. As can be seen from Table 2, domestic polysilicon production is low and far from sufficient to meet the needs of China’s monocrystalline silicon production, especially not the demands driven by the rapid development of the solar photovoltaic industry. Table 2: Current Status of Polysilicon Production in China
Manufacturer (Company) | Production Capacity (tons/year) | Process | Product Grade | Remarks
----------------------|------------------------------|---------|---------------|---------
Xinguang Silicon Industry | 1,260 | Modified Siemens process | Electronic grade | Scheduled to start production in early 2007
Zhongsi Silicon Company | 300 | Modified Siemens process | Electronic grade | Trial operation commenced in September 2005
Emei Semiconductor Materials Factory | 100 | Modified Siemens process | Electronic grade | Capacity increased to 200 tons/year in 2006
Total | 1,660 | Actual production in 2005 was less than 150 tons
(III) Trends in Polysilicon Technology at Home and Abroad
1. Trends in Polysilicon Technology Abroad
With the accelerated adoption of solar power generation worldwide, the solar photovoltaic industry has developed rapidly, leading to a severe shortage of polysilicon for solar applications. As a result, current trends and expansion plans in polysilicon technology both aim to meet the demands of this industry, as shown in Table 3. Table 3: Trends in New Technology Development of Foreign Polysilicon Companies Company Country Trends, characteristics, and progress of new technology development Expansion plans Remarks HemLock United States In 2008, a new polysilicon production technology using trichlorosilane, dichlorodihydrosilane, and silanes in fluidized-bed reactors was developed; the main manufacturing process remains based on the Siemens process. From 2005 to 2008, an additional 3,000 tons were produced. In Tokuyama, Japan, silicon trichloride and hydrogen are used as raw materials; a tubular furnace reactor is employed, and the ‘VLD’ process utilizes graphite tubes to raise the temperature to 1500°C. Silicon trichloride and hydrogen are injected from the upper part of these graphite tubes, where they react on the walls of the tubes at 1500°C to produce liquid silicon, which then drips to the bottom and solidifies into granular silicon. The development of this process began in 1999; aside from the reactor, the main process remains the Siemens process. The 10-ton test line is already in operation; the 200-ton line was put into use in 2005, and the large-scale new technology line came online in 2008. This could enable it to become the second-largest supplier. Wacker in Germany uses trichlorosilane and hydrogen as raw materials, and employs fluidized bed reactors. The industrial-grade test line features two polysilicon reactors of the FBR type. The 100-ton test line was put into operation in October 2004, and apart from the reactor, the main process remains the Siemens process. The production capacity was 5,000 tons in 2005, 6,500 tons in 2006, and 9,000 tons in 2007. It involves the thermal decomposition of silane (SiH4) by SGS in the United States to produce solar-grade granular silicon; the reactor used is of the fluidized bed FBR type. Apart from this, there are no significant changes in the main manufacturing process. Potential production capacity: 200 tons in 2005, 500 tons in 2006, 1,500 tons in 2007, 5,000 tons in 2008. TssI, Germany – thermal decomposition of silane (SiH4); the reactor type is similar to the ’Tube-reactor (graphite tubular furnace)’ used by Tokuyama Soda, as well as to Siemens-type reactors. Laboratory tests were originally planned to be completed in 2004. Production capacity: 20–100 tons in 2005; a production line with an annual capacity of 1,000 tons was established during 2007–2008. Potential new entrants may emerge, but no pilot plant is currently in operation. Information provided by Elkem, Norway: The extraction process involves pyrometallurgy and consists of three stages; the details are kept highly confidential. In June 2004, a decision had not yet been made regarding whether to build a production line with a capacity of 100–250 tons. The original plan was to achieve a production capacity of 2,000–5,000 tons in 2005–2006. Potential new entrants: Table 3 shows the characteristics of the development of polysilicon production technology abroad: 1) The newly developed process technologies are almost all aimed at meeting the needs of the solar photovoltaic silicon cell industry for solar-grade polysilicon. 2) The newly developed process technologies are primarily reflected in the polysilicon production reactor apparatus, which is a key device within complex polysilicon production systems for increasing productivity and reducing energy consumption. 3) The process technology developed for the production of granular polysilicon in fluidized bed (FBR) reactors will be the preferred process technology for manufacturing solar-grade polysilicon. Next is the developed graphite tubular furnace (Tube-Recator) reactor, which is also a new process technology designed to reduce the electricity consumption in polysilicon production, enable continuous large-scale manufacturing, improve production efficiency, and lower production costs. 4) Fluidized bed (FBR) reactors and graphite tubular reactor (Tube-Recator) reactors – the silicon feedstock used to produce granular polycrystalline silicon can be silane, dichlorodihydrosilane, or trichlorosilane. 5) 100% of the polysilicon capacity expansion before 2005 used the modified Siemens process. After 2005, in the expansion of polysilicon production, aside from Elkem, the modified Siemens process was still basically used. From the above analysis, it can be seen that the main new demand for polysilicon at present comes from the solar photovoltaic industry. Internationally, there is a surge in efforts to develop new production processes for solar-grade polysilicon that are low-cost and energy-efficient. There is also a trend to separate the processes used for producing low-purity solar-grade polysilicon from those used for producing high-purity electronic-grade polysilicon, in order to reduce the production costs of solar-grade polysilicon. This, in turn, helps to lower the costs of manufacturing solar cells and promotes the development of the solar photovoltaic industry as well as the wider use of solar energy – undoubtedly an important technical direction. 2. Trends in domestic polysilicon technology: At present, several domestic polysilicon producers that are expanding their production capacities are using the improved Siemens process technology. There have been no reports of breakthroughs in new processing technologies yet. Jiangsu Daquan Group has made a significant entry into the polysilicon industry. \"Through international cooperation, we have acquired the core technologies and processes for polysilicon production. In August, we signed a technology transfer contract and an exclusive rights agreement with the German technology transfer company, European Polysilicon Engineering Co., Ltd.; Daquan Group holds exclusive rights to this technology within China.\" This technology and process can not only produce solar-grade polysilicon but also electronic-grade polysilicon simultaneously, with lower energy consumption and costs for the products produced. ”As introduced by Xu Guangfu, chairman of Daquan. But Xu Guangfu believes there is no need to worry about this anymore. It is reported that by partnering with the American company CDI, which specializes in the design of exhaust gas recovery systems, Daquan Group employs a fully closed operation mode to enable the recycling of materials; as a result, the exhaust gas recovery rate exceeds 98%, thereby avoiding any environmental impact from the production process ； It also collaborated with a Fortune 500 company and Evonik, Germany’s third-largest chemical company, to resolve the production processes and technical challenges related to trichlorosilane, which is required in polysilicon production. This polysilicon project was managed in terms of engineering general contracting by Foster Wheeler Corporation of the United States, while China Tianchen Chemical Engineering Company was responsible for the engineering design and general contracting. The industrial enterprise that has received the most investment in Xianyang’s history has set up operations in Weicheng; a polysilicon project was signed. China Xianyang, 2007-08-02 11:20:36 “We have gone through many difficulties before finally being able to work together!” ”On July 31, Peng Xinsong, the head of Weicheng District, and Hu Junhui, general manager of Shaanxi Tianhong Silicon Materials Co., Ltd., shook hands eagerly at the signing ceremony for the polysilicon project with a total investment of 5.2 billion yuan. The largest industrial enterprise to have been invested in in Xianyang’s history has established itself in Weicheng District; it is also the largest polysilicon project under construction in the country. Polysilicon is regarded as the \"cornerstone of the microelectronics industry\". It is a high-tech product that encompasses multiple disciplines and fields such as chemistry, metallurgy, machinery, and electronics. It serves as an essential raw material for the semiconductor, large-scale integrated circuit, and solar energy industries. It was designated as an industry worthy of promotion during the 11th Five-Year Plan period. Characterized by large investment scales, high technological content, and long industrial chains, it delivers significant economic and social benefits. Through nearly a year of relentless efforts, Weicheng District stood out among numerous competitors and won the favor of Shaanxi Tianhong Silicon Materials Co., Ltd., which decided to invest 5.2 billion yuan in Weicheng District to build a polysilicon production facility with an annual output of over 10,000 tons. The first phase of construction will involve a polysilicon production line with an annual output of 3,750 tons, of which 1,250 tons will be of microelectronic grade and 2,500 tons of solar-grade. A closed-loop production process will be employed to achieve clean production and zero emissions of pollutants, with the comprehensive performance indicators of the products reaching leading levels in China and advanced levels internationally. Once all the projects are completed, the annual output value could reach over 20 billion yuan. The successful signing of this project fills the gap in the production of high-tech electronic base materials in our country, marking a step forward for the development of China’s high-tech electronics industry to a newer and higher level. Weicheng District stated that it will go all out to provide the highest quality, fastest, and most comprehensive services for the project, so as to ensure its early completion and commissioning. Daquan’s largest polysilicon production project: On August 7, 2006, Daquan signed a technology transfer contract and an exclusive technology agreement with European Polysilicon Engineering GmbH in Germany, thereby granting the Daquan Group exclusive rights to use this technology within China. Through this technology and process, Daquan is able to produce not only solar-grade polycrystalline silicon but also electronic-grade polycrystalline silicon, with lower energy consumption and costs for its products. Subsequently, Daquan Group collaborated with the American company CDI to adopt a fully closed-loop operation system, enabling the recycling of materials and achieving a recovery rate of over 98% for exhaust gases, thereby avoiding environmental impacts from the production process. It is reported that the American company CDI is a specialist in the design of exhaust gas recovery systems, boasting extensive experience in this field; the exhaust gas recovery systems used in polysilicon plants in Europe and the United States are mostly designed by this company. The project utilizes a fully digital automated control system and is equipped with unique safety devices to ensure safe and reliable operation. Dquan Group has also collaborated with Germany’s Degussa to address the production processes and technical challenges related to trichlorosilane, which is required in polysilicon production. Evonik Industries in Europe is one of the world’s top 500 companies and the third-largest chemical company in Germany. It possesses advanced production processes and technologies for trichlorosilane, and it collaborates with numerous polysilicon manufacturers in Europe and the United States. The cooperation with Degussa provides a guarantee for the implementation of the polysilicon project by Daquan Group. The polysilicon project of Daquan Group has officially commenced construction. Polysilicon is the direct raw material used in the production of monocrystalline silicon, and it serves as the fundamental material for electronic devices in fields such as artificial intelligence, automatic control, information processing, and photoelectric conversion; it is thus referred to as the \"cornerstone of the microelectronics industry\". Through international cooperation, Daquan Group has acquired the core technologies and processes for polysilicon production. On August 7, 2006, it signed a technology transfer contract and an exclusive rights agreement with the German technology transfer company, European Polysilicon Engineering GmbH; Daquan Group thus holds exclusive rights to this technology within China. This technology and process can not only produce solar-grade polysilicon but also electronic-grade polysilicon simultaneously, with lower energy consumption and costs for the products produced. In addition, through cooperation with foreign companies, Daquan Group adopts a fully enclosed operation system to enable the recycling of materials, achieving a tail gas recovery rate of over 98%, thus ensuring safety, environmental protection, and reliability. The Daquan polysilicon project is managed by the American company Foster Wheeler, while the design work is carried out by China Tianchen Chemical Engineering Company. ·Some views on the valuation of international polysilicon manufacturers. There are only seven or eight major polysilicon manufacturers in the world; the largest one, Hemlock, is not listed on the stock market. The companies that are listed include REC, MEMC, Wacker, Tokuyama, Mitsubishi Material, Sumitomo Titanium, etc. REC operates across the entire value chain from polysilicon to solar modules, while MEMC focuses on polysilicon and silicon wafers, with more than half of its business related to semiconductors. Wacker and Tokuyama are comprehensive chemical manufacturers, Mitsubishi Material is a comprehensive materials manufacturer, and Sumitomo Titanium’s business revolves around titanium products – none of these companies are pure polysilicon manufacturers. Moreover, their valuation levels vary greatly as well: Wacker currently has a 06PE ratio of 27 and a 07PE ratio of 21; MEMC has a 06PE ratio of 37 and a 07PE ratio of 20; REC has a 06PE ratio of 50 and a 07PE ratio of 35; Mitsubishi Material has a 06PE ratio of 92 and a 07PE ratio of 54; Sumitomo Titanium has a 06PE ratio of 83 and a 07PE ratio of 45; and Tokuyama has a 06PE ratio of 36 and a 07PE ratio of 26. MEMC is currently the subject of much discussion among netizens, which is related to the large number of people who buy U.S. stocks. MEMC has a 2-year expansion plan, aiming to increase production from the current 3,800 tons to 8,000 tons in 2 years, with the expansion focusing mainly on solar-grade polysilicon. But objectively speaking, at the current stage MEMC is better classified as a semiconductor stock; it is a key component of the Philadelphia Semiconductor Sector Index. Its production capacity of over 3,800 tons of polysilicon is primarily for electronic use, and MEMC has a large capacity for producing silicon wafers. Most of its polysilicon is processed into silicon wafers before being sold. MEMC supplies far more silicon wafers to the semiconductor industry than to the solar industry, and the gross profit margin associated with the production of silicon wafers is much lower than that of direct polysilicon sales, which in turn reduces the overall gross profit margin. Similarly, the prosperity of the semiconductor market is also far inferior to that of the solar energy market, with an annual growth rate of only a few percentage points. The second issue is the problem of long-order constraint under the polysilicon bottleneck. Under the current constraints, do those that are ahead or those that are behind have a higher gross profit margin on sales? Hemlock, MEMC, and Wacker sell almost all of their output under long-term contracts, and most of these contracts are signed at an early stage at relatively low prices. The prices for new contracts signed to expand production capacity are also low currently; the standard market price is 70–80 dollars per kg. It depends on who is able to secure such contracts. Incidentally, this is roughly the same price that YGE pays to Wacker, on the condition that one of the contracts is for a period of 6 years and the other for 7 years. Clearly, they cannot take full advantage of the high profits resulting from the polysilicon shortage. The long-term and steady development strategies adopted by major polysilicon manufacturers abroad are certainly sophisticated; we are merely discussing the short- to medium-term issues related to sales prices and profits. That Behind entity in Sichuan has decided to sell at Chinese market prices; it seems that those shareholders are determined to become quick-riches seekers, acting in the same way as Zhongsi when it sold Suntech at 1,750 RMB/KG. No wonder Dr. STP got angry when he mentioned this to the media. Of course, we have no intention of commenting on the sales strategies of domestic companies; we simply observe prices and profits as well. The price at which Xinguang sold its products to its cousin Yingli is considered the most favorable. According to the contract attached to the prospectus, the price is 1,650 RMB/KG, which is equivalent to 220 USD/KG; the price offered to Yuyan is certainly not lower than this amount. Meanwhile, some people are willing to underwrite the remaining portion of the products sold by Xinguang to Yingli at a price of 300 USD/KG. So what is the price at which Sinoglow sells it to others? What is the gross profit margin? How long can it last? What will be the profit in 2 years? Here is an interesting phenomenon: under the polysilicon bottleneck in the coming years, those new entrants with higher costs, not being bound by long-term contracts, can actually enjoy much higher gross profit margins. Is this a problem? Third question: until when will the polysilicon bottleneck persist? Two years ago, the market said that the polysilicon bottleneck would ease by 2008, but since the second half of last year, more and more market participants believe that this bottleneck will persist until 2010. So, when exactly will it end? Wacker and Hemlock have proposed new expansion plans for this year, aiming to reach 21,500 tons and 36,000 tons respectively by after 2010; their original expansion plans were to reach 14,500 tons and 19,000 tons by 2010. It is well known that large polysilicon manufacturers have always been cautious and reserved when it comes to expanding production; to the point where they ignore the huge profits in the polysilicon retail market and sign long-term contracts at low prices while continuing to expand their production. Therefore, their latest expansion plans actually reflect their view of the polysilicon market for those born after 2008 and even after 2010, confirming that the polysilicon market for this group will not ease up so easily. Furthermore, for Sinoglow, the manufacturer’s goal this year is to achieve third place while striving for fourth. What’s important for us is to look at its production and sales in the third and fourth quarters, especially the fourth quarter; based on these figures, we can assess the situation in the coming year. That is, after deducting startup costs, we can determine its actual profitability for the next year, and I am optimistic about this. The spot market for solar-grade polysilicon is on the verge of a crisis: MEMC’s supply has decreased, and the price of 6-inch polysilicon could exceed $9. 09/06/2007 – MEMC, a major US producer of polysilicon, experienced a power outage that led to a reduction in its supply during the third quarter. As one of the key suppliers in the spot market for polysilicon wafers, and given the existing shortage in this market, it is likely that the market will not be able to cope with the reduced supply from MEMC. Solar industry experts say that the probability of the price of 6-inch polysilicon wafers exceeding $9 per piece could increase significantly. Solar industry officials say that the spot market for solar materials is in a state of great chaos; the price of pure polysilicon remains above $300 per kilogram. As for 6-inch polysilicon wafers, their price rose from around $7.0–7.2 per wafer in the third quarter of 2006 to approximately $8.8–9.0 per wafer by the third quarter of 2007. The shortage of supply was particularly evident in the second half of 2007. Currently, the supply source for the spot market of solar materials is diverse; in addition to traders, some established polysilicon manufacturers also supply these materials. Among them, the American company MEMC is recognized as one of the main suppliers in the spot market. MEMC operates polysilicon plants in Italy and the United States. The estimated annual production capacity for polysilicon used in semiconductors and solar applications was around 4,500 tons in 2006; this figure is expected to rise to 6,000–6,500 tons in 2007 and around 9,000 tons in 2008. The company plans to increase its annual production capacity to over 15,000 tons by the end of 2010, while the monthly output of 12-inch silicon wafers is also set to exceed 700,000 pieces by the same time. According to estimates by solar industry players, approximately 15% to 20% of MEMC’s polycrystalline silicon production goes to the spot market. If MEMC reduces its supply to this market, the possibility of 6-inch polycrystalline silicon wafers reaching prices above $9 each will increase significantly. However, since both the prices in the spot market and the profit margins are better than those in the contract market, how MEMC allocates its resources is of great interest to solar industry players. The solar industry believes that what concerns manufacturers the most regarding the MEMC incident is the psychological impact on the spot market; this impact may be greater than the actual effects. Given the high level of enthusiasm and sensitivity in the photovoltaic market, any disturbance can easily trigger strong chain reactions. The spot market might see rushes to acquire materials or stockpiling of supplies due to fears of shortages, thereby accelerating the expansion of these shortages. Otherwise, considering that MEMC has only reduced its revenue targets by 5%, the actual impact should be short-term and limited in scale.