Hoku announces amendment to contract with Alex New Energy

Hoku Materials Inc., a wholly owned subsidiary of Hoku Scientific Inc.,established to manufacture and sell polysilicon for the solar market,and Shanghai Alex New Energy Co. Ltd. (Alex), a manufacturer ofcrystalline silicon solar cells, modules and photovoltaic (PV) productsin China, today announced the amendment of the polysilicon supplyagreement in effect between the two companies.

According to theterms of the amendment, both companies have agreed to delay the firstshipment of polysilicon by Hoku to Alex from the first quarter to thethird quarter of calendar year 2010. The other commercial terms of thesupply agreement remain unchanged, including pricing, contractduration, and shipment volumes, among others.

"This amendmentadjusts the timing of our first delivery to Alex to a date that isamenable to both companies," said Dustin Shindo, chairman and chiefexecutive officer of Hoku Scientific. "Hoku was prepared to shipthird-party product in accordance with our contract, but the updatedschedule more closely matches Alex’s revised supply chain forecastswhile still conforming nicely to our projected production ramp. We lookforward to the commencement of our regular deliveries of polysilicon toAlex in 2010."

"We are pleased by this amendment because itprovides clear benefits to both companies, and reflects the continuedstrong partnership between Hoku and Alex," said Alex’s president, LianWen Zhang.

Subsequent to the recent closing of its financingwith Tianwei New Energy, Hoku reported it was now preparing for areactor test demonstration in the first quarter of calendar year 2010,followed by a phased ramp-up to a planned initial production capacityof approximately 2,500 metric tons of polysilicon per year. The Companynoted that the reactor test demonstration was pushed back slightly dueto the timing of the close of the transaction with Tianwei.

Hokuexplained that this first phase of production would be completed usingthird-party trichlorosilane (TCS), initial quantities of which hadalready been procured and delivered to the Company’s Pocatellofacility. Hoku explained that this revised ramp up and productionschedule was expected to provide sufficient polysilicon to fullysatisfy the Company’s current contractual delivery obligations.

Hokureported that it expected to continue adding reactor capacitythroughout calendar 2010 until reaching the plant’s full annualproduction capacity of 4,000 metric tons in the second half of theyear. Hoku also said that it planned to bring its on-site TCSproduction facility online by the end of calendar 2010, which wouldeliminate the Company’s need to procure third-party process chemicals.


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