Weak demands through the end of the year and beyond have silicon wafer makers joining together withsolarcompanies to forecast tough times ahead.

ReneSola (NYSE: SOL) reported a 153.5 percent jump in its third-quarter net income Tuesday, but cautioned that declining demand from its Chinese customers and a drop in polysilicon prices will likely squeeze its earnings in the fourth quarter and into the first quarter of 2009.

Polysilicon is the main ingredient for making wafers, which are then turned into solar cells and panels for installation.

The company's shares plummeted nearly 23 percent to reach $3.17 per share in recent trading.

China-based ReneSola issued its outlook a day after another silicon wafer maker, MEMC Electronic Materials Inc. in St. Peters, Mo., cut its fourth-quarter outlook to $500 million (plus or minus $25 million) from its previous target of $540 million to $600 million. Caris & Company on Tuesday downgraded MEMC's stock from "above average" to "average." Collins Stewart reduced it from "buy" to "hold."

MEMC's interim CEO, Marshall Turner, said in a statement that the weakening economy isn't getting any better, and is increasingly leaving its mark on the solar market.

"These effects are quickly cascading backward through global supply chains, and we cannot expect to be immune to the impact on our customers in all the markets we serve," Turner said.

The solar industry can expect to hear the same sentiment in the coming weeks as more solar companies report their earnings. Last week, JA Solar Holdings Co. (NDSQ: JASO), a solar cell maker in China, cut its sales forecast after reporting third-quarter losses (see JA Solar Posts Losses, Blames Lehman).

Applied Materials, which develops equipment for making thin-film solar and microchips, plans to cut 1,800 jobs, or 12 percent of its worldwide staff (see After 45% Profit drop, Applied Materials to Cut 12% of Staff).

ReneSola reported a huge boost to its third-quarter financial results. The revenue reached $215.8 million, a 197.4 percent increase from $72.5 million in the same quarter a year ago. Net income rose to $32.4 million from $12.8 million, or in the year-ago period.

Earnings for ordinary shares were 23 cents per share for the third quarter, up from 13 cents per share in the same quarter in 2007. Earnings for American depositary shares were 46 cents per share for the third quarter. Each ADS is equaled to two regular shares.

ReneSola's CEO Xianshou Li said in a statement that the company's average selling prices for its wafers are getting squeezed even though polysilicon prices have dropped "significantly in recent weeks."

Analysts already expect polysilicon prices to drop even further in 2009 and beyond, leading to a glut of the material (see Polysilicon Prices Head for a Steep Fall).

ReneSola said it is currently negotiating sales contracts with its customers, so it will keep the same sales and production forecast for 2008. The production for the year is expected to be 340 megawatts to 350 megawatts. The 2008 revenue should reach $640 million to $670 million. The company is declining to give any 2009 forecast, however, citing market uncertainties.

During the third quarter, ReneSola produced 102.1 megawatts worth of wafers, a 23.8 percent growth from 82.5 megawatts in the second quarter of this year.

Li asserted that the company has a healthy stash of cash, and any need to borrow money should be easily met thanks to lines of credits provided by two of China's largest banks.