Our plans to enter the solar power market represents the logical extension of our business as a provider of clean energy technologies, and complements our core fuel cell business. However, while the market for fuel cell products is still emerging, the solar market is already a rapidly growing industry.

One of the primary limits to the growth of the solar market is supply constraints of polysilicon, the key material used in solar modules and integrated circuits. To address these supply constraints, we also plan to manufacture sufficient quantities of polysilicon to meet our initial and future expected demand.

—Dustin Shindo, President and CEO, Hoku Scientific

Hoku Scientific intends to operate the solar module business as a separate business under the name “Hoku Solar.” Hoku Solar expects to enter the market through the manufacture and sale of polysilicon-based photovoltaic modules, with planned initial manufacturing capacity of 30 megawatts per year beginning in the second half of calendar year 2007.

Hoku Scientific intends to build a polysilicon processing plant designed to initially produce up to 1,500 metric tons of polysilicon per year, beginning in the second half of calendar year 2008. The polysilicon plant is expected to be operated by Hoku Scientific as a separate business under the name “Hoku Materials.” Initially, plans call for approximately 300 metric tons of polysilicon produced by Hoku Materials to be allocated to Hoku Solar, while the remaining 1,200 metric tons are expected to be available for sale to the solar and integrated circuit markets.

Hoku Scientific will also form a new business unit called “Hoku Fuel Cells” to continue the core business of developing, marketing, manufacturing and selling membranes and MEAs for stationary and automotive PEM fuel cells.

Hoku has been developing membranes and MEAs for Nissan’s fuel cell cars and trucks, among other applications. (Earlier post.)