LDK plans to install the reactors in its first two silicon-manufacturing plants currently under construction in China. The Chinese company has previously relied solely on outside silicon suppliers for the main ingredient to make its wafers, but in November – after facing allegations that it had misstated its silicon inventory, since cleared in an independent investigation – announced it had begun construction on its own silicon plant in Xinyu City, China (see LDK Shores Itself with New Silicon Supply).
The company in April raised $400 million to build the two plants and in July announced it had completed the initial phase of its first plant, expected to produce up to 1,000 metric tons of silicon when it's fully completed this year (see LDK to Raise $400M and LDK Confirms Plant is On Track). The second plant is expected to reach a capacity of 15,000 metric tons annually next year.
LDK announced its latest deal at a time when GT Solar investors were concerned that the relationship between the two companies had soured. LDK is one GT Solar's major customers, accounting for 62 percent of GT Solar's revenue during the fiscal year that ended on March 31, 2008, according to company filings with the U.S. Securities and Exchange Commission.
A day after GT Solar went public on the Nasdaq stock exchange in July, LDK said it had signed a deal to buy silicon ingot furnaces from JYT Corp., a GT Solar competitor. The announcement prompted investors to question whether GT Solar was losing an important customer, and GT Solar's stock sank that day as a result (see GT Solar Sinks on LDK News).
The scenario attracted investor lawsuits against GT Solar. A class-action lawsuit filed by Coughlin Stoia Geller Rudman & Robbins mentioned delays in delivering equipment to LDK (see GT Solar IPO Attracts Class-Action Suits).
Both GT Solar and LDK have sought to quash speculations about their relationship.
During an earnings call in August, LDK CEO Xiaofeng Peng told Wall Street analysts that the company still plans to buy equipment, including furnaces, from GT Solar.
"Definitely we would negotiate further opportunities to buy more equipment from them," he said. "We have many orders ... [GT Solar is] sill a very important supplier for LDK."
Stephen Simko, an equity analyst at Morningstar, said investors could see the deal announced Thursday as an assurance that the two companies' relationship remains solid.
You would have to assume that the concerns that surfaced last month were a little overblown," Simko said.
LDK's stock rose 31 cents, or 0.68 percent, to close Thursday at $45.98 per share while GT Solar saw its shares increase 24 cents, or 2.23 percent, to close at $11 per share.