A shortage ofsolar-grade silicon has defined the industry for the last few years, constraining production below demand and dramatically boosting costs for new manufacturers. Last week, research firm Frost & Sullivan forecast that the shortage will end this year, when it expects the top four silicon producers to grow their capacities by more than 50 percent.

And new silicon manufacturers also are growing production. AE Polysilicon earlier this month broke ground on a facility expected to initially produce 1,500 metric tons of silicon annually and to grow to 12,000 tons annually by 2010 (see Gunther Portfolio posts here, here and here). Its customer, Motech Industries, expects to receive silicon from the plant as early as 2009, a year later than originally expected

Still, solar manufacturers continue to sign long-term silicon contracts. LDK Solar (NYSE: LDK) on Friday announced an eight-year deal to sell multicrystalline silicon wafers to Hyundai Heavy Industries and Yingli Green Energy Holding Co. (NYSE: YGE) said Monday it had signed two silicon-supply agreements with DC Chemical Co., based in Korea, worth $215 million over five years.

In addition, some companies are rethinking their business strategies (click here to continue to the next section).