Chinese wafer supplier Huantai Silicon has suspended its partnership with the country's solar cells and panels giant Suntech Power on their joint venture Glory Silicon, and will jointly build a new venture with U.S. veteran wafer producer MEMC Electronic Materials.

Glory Silicon, established on the assets of Huantai Silicon, has served as an affiliate of Suntech since May 2008. But now, Glory Silicon is about to be restructured, along with its 600 megawatts of annual wafer production capacity.

"We definitely no longer cooperate with Suntech," Sophia Yuan, Huantai Silicon's CEO assistant, said in a telephone interview on Tuesday. Further details about this matter would not be announced until October, she added.

A Suntech spokesman could not be reached for comment.

Currently, Huantai Silicon is establishing a new joint venture with MEMC, says Ms. Yuan, whose company previously manufactured wafers for MEMC as an OEM service.

Ms. Yuan declined to explain the reason for this change in the status of the partnership, but local media outlet 21st Century Business Herald quoted an unnamed source as saying that Huantai Silicon has sought cooperation with MEMC to further expand downstream into the solar cells business, thus causing a dispute with Suntech.

Huantai Silicon's Ms. Yuan made no comment on that report, saying that the company's upcoming joint venture will first focus on wafer production.

Huantai Silicon is poised to expand its presence in the industry, as the profit margin of wafer manufacturing has decreased significantly since the global financial crisis, according to analysts.

Despite the fact that Suntech is unlikely to suffer from short supplies in wafers, the lack of internal wafer supply could still hurt Suntech's ability to control costs and compete with its integrated competitors such as Trina Solar and Yingli Green Energy, warns Jiang Qian, an analyst with Shenzhen Zhongzhe Investment Consulting Co.

Tags: china, demand, glory, huantai, joint venture, memc, photovoltaic, pv panels, silicon, suntech, supply, utility scale