Canadian Solar completes first phase of ingot/wafer plant, sticks by 2009 guidance

Canadian Solar said it has completed and commissioned Phase I of its ingot and wafer plant on schedule. The new production capacity gives the company an annualized ingot and wafer capacity of 60 MW. CSI expects to complete the second phase of its ingot plant by year-end, ahead of the original schedule, which will bring the company's ingot and wafer capacity to between 150 and 200 MW.

The company also said that its 250-MW Phase II cell plant will be completed in October, with the next stage set to begin immediately thereafter. CSI's current annualized capacity has reached 220 MW and should meet its 400-MW target by the end of December, also ahead of schedule.

Both new plants, located in Jiangsu, China, are fully financed and fully supplied with both wafer and feedstock for the fourth quarter, according to the company, which will enable the production of 45-50 MW of polysilicon cells and upgraded metallurgical grade (UMG) e-Cells internally. This will be supplemented by solar cells supplied from the company's long-term suppliers at competitive prices.

In light of these recent developments, the CSI has reiterated its 2008 top-line revenue and gross margin guidance of $850 million-$970 million and 13-15%, respectively.

CSI also said that it believes it has secured approximately 4000 metric tons of UMG for 2009, enabling it to produce between 250 and 300 MW of UMG e-cells and e-Modules in 2009. As a result, the company has reiterated its 2009 shipment and gross margin guidance of 500-550 MW and 13-15%, respectively.

"Demand remains high for both our regular high-efficiency modules and our proprietary e-Module products," said company chairman/CEO Shawn Qu. "Average selling prices are expected to remain stable for the balance of the year and the raw material prices have begun to ease. The increased internal production capacity in Q4 will contribute meaningfully to our gross margins and will help us to reach our revenue and margin targets, in spite of volatility in the Euro. "

Our highly flexible vertical integration model is robust and has allowed us to quickly adopt to the market dynamics. We expect to be able to continue to meet our objectives for 2009 and are cautiously optimistic that there is upside potential in our '09 estimates," concluded Qu.

In a recent move by CSI to bolster its materials supply chain, the vertically integrated solar manufacturer signed long-term deals with GCL Silicon for 510 metric tons of polysilicon feedstock and 1.8 GW of wafers.

-- Tom Cheyney