Photovoltaics vendor Zhengrong Shi is worth only $2.2 billio
http://www.forbes.com/free_forbes/2006/0327/062.html
Photovoltaics vendor Zhengrong Shi is worth only $2.2 billion. If he could just make solar power cost- effective, he could be really rich.
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Obscure, yes. Poor, no. Shi, an Australian citizen, is mainland Chinas richest man and one of its newest billionaires, worth $2.2 billion. His company, Suntech Power Holdings, produces solar cells, panels and related gear used to turn sunlight into electricity. Since their listing in December on the New York Stock Exchange, Suntechs shares have nearly doubled, giving the company a $5.5 billion market value, the largest in the world for a manufacturer of solar cells.
Like so many Chinese firms, Suntech, based in the city of Wuxi, is gaining on its overseas competition. Its production nearly doubled last year, making it the worlds eighth-largest producer of solar cells, with $226 million in revenue, up from $85 million in 2004. Shi predicts Suntechs sales will triple in the next three years, which would put it in the same ranks as Kyocera and Q-Cells.
Our success comes from being in a good industry, says Shi, a modest man who rarely grants interviews.
Worldwide demand for solar cells has been growing 30% a year for the past three years, and the good times will likely continue. Solarbuzz, a research firm in San Francisco, predicts that the industrys sales will climb from $10 billion this year to $19 billion in 2010. Such prospects have injected froth in solar stocks. At 57 times projected 2006 earnings, Suntech cant even hold a candle to SunPower, a California solar cell maker at 131 times.
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China is now fourth in the world in solar cell production, after Japan, Germany and the U.S., according to industry consultant Paul Maycock, editor of the monthly newsletter PV News. Suntech accounts for more than half of Chinas output. Shi will have a lot of staying power in the industry, says Jesse Pichel, a senior analyst at Piper Jaffray (nyse: PJC - news - people ) in New York.
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Working on this shoestring, Shi bought secondhand equipment. He picked up manufacturing gear from the bankrupt U.S. company Astrosolar at 50 cents on the dollar. Taking advantage of Chinas low wage rates, he has a lot of his 1,300 workers doing jobs that in Germany or Japan would be handed off to a robot. Suntechs products are 10% cheaper than those of U.S. rivals, says analyst Pichel.
For now Shi has also managed to overcome the solar industrys big headache: an extremely tight supply of silicon wafers. Contract prices are likely to rise by 30% or more this year and another 20% in 2007. Shi has long-term contracts for wafer supplies for 40% of his production, including a ten-year deal with Deutsche Solar in Germany.
Shis ability to innovate with new materials such as thin-film solar cells and silicon purification technologies will be crucial to his ability to keep up with industry heavies such as Sharp and bp Solar. The companys public offering, which raised $400 million, will add $20 million to its research budget, more than it has spent since its inception.
Suntechs work on silicon purification will help raise its sunlight-conversion efficiency to 18%, about 1.5 percentage points ahead of the industry, according to Shi. And he doesnt rule out overseas mergers or acquisitions that advance his technology. Its ideas that will determine success, he says.
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Shi says Suntech, like China itself, is ready to leapfrog. Now the industry looks fairly small, and applications arent fairly spread. But I believe with the momentum that we have, in three to four years time it will really take off.
Anything could happen. With a few more research breakthroughs or a continued rise in overall energy prices, unsubsidized solar might even become competitive with conventional power supplies.
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