Demand from our main customers slowed in 2009. Since WACKER supplies many different industries, we were able to partially compensate for weak demand (especially in the semiconductor and automotive sectors) with higher solar sales volumes. We respond to competitive pressure from Asia by expanding our regional production base and by maintaining our quality and cost leadership for high-volume products. Overcapacity in the chemical industry, and resulting price pressure, cannot be ruled out. We minimize these risks in various ways. For example, we align production with demand and perform quantity controls to ensure capacity utilization. Our approach also includes structured price management, process optimization and intense cultivation of growth markets. Importantly, a key ongoing goal is to increase the share of resilient product groups in our portfolio and rank among the global leaders in all our business fields. By cooperating closely with customers, we aim to quickly open the way to novel applications and, thus, foster long-term customer loyalty.
The semiconductor industry is prone to cyclical fluctuations and intense competition. As a result, volumes and prices are especially at risk. Periods of strong growth lead to significant volume growth and price increases. During downturns, in contrast, the reverse is the case. Siltronic tries to reduce these risks through systematic cost management and production flexibility.
Our PV-grade polysilicon business is exposed to price risks. Moreover, new competitors (some receiving state subsidies) are gaining a foothold in the market. We counter these risks by continually optimizing our productivity and cost position, by maximizing plant utilization through long-term agreements and by flexibly aligning capacity expansion with market growth. The German solar industry has been highly subsidized in past years via Germany’s “EEG” renewable energy legislation. Subsidization will be reduced soon, impairing demand for solar installations in Germany – a key solar market. Nevertheless, we do not, as a result, see a serious risk of hyperpure polysilicon demand weakening in the long term.