Thursday, November 29, 2007

Hoku and Solarfun Sign $306 Million Polysilicon Supply Contract

Hoku Announces Plans for Phase II Polysilicon Plant

November 26, 2007: 08:30 AM EST

Hoku Scientific, Inc. (NASDAQ: HOKU), a diversified provider of clean energy products and technologies including polysilicon for the solar industry, and Solarfun Power Hong Kong Limited, a subsidiary of Solarfun Power Holdings Co., Ltd. (NASDAQ: SOLF), an established manufacturer of both photovoltaic (PV) cells and modules in China, today announced the signing of a definitive contract for Hoku's sale and delivery of polysilicon to Solarfun over an eight-year period beginning in mid-2009.

Under the contract, up to approximately $306 million may be payable to Hoku during the eight-year period, subject to product deliveries and other conditions. The contract provides for the delivery of predetermined volumes of polysilicon each year, with the first shipment in the second half of 2009 and continuing over an eight-year period from the first shipment, at set prices that will decline throughout the term of the agreement. The contract also provides for an initial deposit of $10 million to Hoku on or before December 28, 2007, and requires that Solarfun make additional prepayments for products in the aggregate amount of $45, which are to be paid to Hoku in three installments: the first payment is due on September 30, 2008, and the final payment is due on March 31, 2010. The $45 million prepayment amount is to be placed in an escrow account by Solarfun, or secured by a letter of credit from Solarfun's bank, on or before January 10, 2008. Under the agreement, Hoku will grant to Solarfun a security interest in its polysilicon assets to secure Hoku's obligation to repay $55 million to Solarfun as a credit against product shipments over time.

"We are pleased to have established this relationship with Solarfun, a rising star in the solar industry," said Dustin Shindo, Chief Executive Officer of Hoku Scientific. "Their long-term strategic direction and their aggressive expansion plans make them an ideal partner for Hoku."
"Hoku has built a solid reputation as a leader among the new entrants in the polysilicon field and we are extremely confident in their ability to meet our long term polysilicon requirements," said Solarfun's Chairman Lu Yonghua. "This contract will help us realize our anticipated manufacturing cost advantages through our previously disclosed vertical integration and capacity expansion plans."

Hoku is in the process of building a polysilicon plant in Pocatello, Idaho that is being designed for annual production up to approximately 2,500 metric tons of polysilicon. Hoku is currently planning a Phase II expansion of the polysilicon plant to expand capacity beyond 2,500 metric tons. Hoku's customers, including SANYO Electric Co., Ltd., Suntech Power Holdings Co., Ltd., Global Expertise Wafer Division Ltd. -- a subsidiary of Solar-Fabrik AG -- and Solarfun, have collectively agreed to purchase approximately $1.5 billion in polysilicon over a seven to ten year period.

"Signing this contract with Solarfun is the first order we have accepted for Phase II of our polysilicon business, which will include additional production capacity in excess of the 2,500 metric tons of annual capacity that is included in our Phase I development," concluded Dustin Shindo. "The ultimate capacity of our Phase II expansion, in excess of the volumes we have committed to Solarfun, will be determined based on the total contracts we sign with other customers over the next several months."

About Hoku Scientific, Inc.

Hoku Scientific, Inc. (NASDAQ: HOKU) is a diversified clean energy technologies company with three business units: Hoku Materials, Hoku Solar and Hoku Fuel Cells. Hoku Materials plans to manufacture, market, and sell polysilicon for the solar market from its plant currently under construction in Pocatello, Idaho. Hoku Solar is a provider of turnkey photovoltaic systems in Hawaii. Hoku Fuel Cells has developed proprietary fuel cell membranes and membrane electrode assemblies for stationary and automotive proton exchange membrane fuel cells. For more information visit

About Solarfun Power Holdings Co., Ltd.

Solarfun Power Holdings Co, Ltd. (NASDAQ: SOLF) manufactures both PV cells and PV modules, provides PV cell processing services to convert silicon wafers into PV cells, and supplies solar system integration services in China. Solarfun produces both monocrystalline and multicrystalline silicon cells and modules, and manufactures 100% of its modules with in-house produced PV cells. Solarfun sells its products both through third-party distributors, OEM manufacturers and directly to system integrators. Solarfun was founded in 2004 and its products have been certified to TUV and UL safety and quality standards. For more information visit

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