Solar cell maker moves into wafers

Germany's Schott Solar and Wacker Chemie AG have formed a joint venture to produce silicon wafers for solar cells, another sign of how the solar industry is consolidating.

Under the deal, Wacker will supply purified silicon to Schott Wacker (easily one of the more accidentally amusing company names in years). Schott Wacker will then turn the silicon into wafers and sell the wafers to Schott. Schott will then turn the wafers into solar cells. The joint venture will also sell wafer to other solar cell makers.

By 2012, the joint venture is expected to produce enough wafers to for a gigawatt worth of solar cells a year. The two companies estimate the joint venture will create 700 jobs in Germany. Total investment will come to over $500 million.

With the joint venture, Wacker effectively locks in a customer for its silicon and Schott guarantees itself a supply of silicon. In the past three years, several solar cell makers have been plagued by silicon shortages. Schott makes solar cells (as well as equipment for solar thermal plants) but has not participated in wafer manufacturing to date.

Other companies are also moving to absorb more portions of the solar cell manufacturing process as a way to reduce costs, guarantee supplies or streamline supply chains. China's Suntech Power Holdings has begun to experiment with designing its own manufacturing equipment. Not all companies, however, are following this trend.