MEMC Electronic Materials (WFR) Cuts Contract Price With Gintech

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09:35:16 am on February 18, 2009

Earlier this week, MEMC Electronic Materials announced it would decrease the price that Suntech Power Holdings is paying for its solar wafers. Now, they have changed their contract with Gintech Energy as well. The change in the contract is similar to the change made to Suntech’s contract-price per wafer is dropping, but the volume of wafers will be increased so that the ultimate revenue from the contract remains unchanged.

Here’s Eric Savitz from TechTrader Daily on why this is bad news for MEMC:

The downward pressure on prices reflects a sharp fall in the price of polysilicon, the raw material used in the production of silicon wafers. As I noted in my column in the print edition of Barron’s this week, the spot price of poly has dropped from $450/kg in mid-2008 to a range of $130-$150/kg, and could be heading to the $40-$60 range. That is especially bad news for MEMC, a pure play on poly and silicon wafers.

WFR today is down $1.70, or 10.6%, to $14.41.

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