The recession has left silicon producers struggling, but that doesn't mean demand will stay stale forever.

That's the thinking behind Tokuyama Corp.'s plan to build a silicon plant in Malaysia to target thesolarmarket. The company already has a manufacturing complex in its native Japan and sells mostly to chip companies.

Tokuyama said the global solar market is still set to grow in the long run even though it must contend with the near-term sagging demand. The company said Tuesday it intends to invest ¥65 billion ($677 million) and hire Chiyoda Corp. to build the factory, which would be able to roll out 6,000 tons of silicon per year.

The company hopes to start building the factory in early 2011 and start operating it in spring 2013.

Tokuyama's foray into solar reflects the ongoing shift of talents and investments from the chip industry to the solar energy business. The company announced its silicon factory plan on the same day when the Taiwan Semiconductor Manufacturing Co. said it's setting aside $50 million to invest in solar – it could buy companies or start its own.

Tokuyama might have better timing than other silicon producers who have expanded their manufacturing capacities just in time for a market downturn.

The contract price for silicon has plummeted by 50 percent over the past year, bringing it closer to the spot market price, said market research firm New Energy Finance. Solar cell makers have scrambled to re-negotiate their silicon contracts or canceled them altogether because market demand for solar cells also has fallen.

Last month, Hoku Materials announced that it had modified its contract with China-based Suntech Power that allows Hoku to delay delivering silicon. In return, Suntech wouldn't have to make certain payments.

Hoku, based in Pocatello, Idaho, has been trying to build a silicon factory but ran into money trouble earlier this year when some of its customers couldn't make the advanced payments for securing their shares of the silicon production when the factory is up and running. Hoku will use that money to finance the construction of the factory, which would be able to produce 4,000 tons per year.

Suntech not only has paid Hoku $2 million in prepayments in 2007, but the Chinese solar company has also invested $20 million in Hoku when it issued shares in February 2008, Hoku said.

Aside from renegotiating with its customers, Hoku is considering putting itself up for sale.

Meanwhile, budding silicon company, Silicium de Provence (SilPro) in France, is now liquidating its assets because its investors couldn't agree on its future. SilPro filed for bankruptcy court protection in April. The whole ordeal is costing one of its investors, Solon in Germany, a one-time charge of €52 million ($73.6 million) for the second quarter. 

Image of a solar installation at the Kona International Airport, Hawaii Island courtesy Hoku Materials.