MEMC Electronic Materials, Inc. (WFR)

Upside possibilities: Experienced supplier of polysilicon and high quality 100 mm, 200 mm, and 300 mm single crystal silicon ingots and wafers for the semiconductor induxtry. Rising demand for polysilicon to makers of solar photovoltaic cells. Vertically integrated company manufactures both high quality wafers and the polysilicon raw material. New suppliers of polysilicon are facing manufacturing challenges and new capacity will be slow to reach market. This gives WFR a huge lead in locking contracts for future supply. Largest US supplier of polysilicon. Due to floundering competition, may be able to steal market share and ink long-term supply contracts with partnerships to build additional capaciy or to buy incompetent competitors' capacity with large cash reserves.


Downside risks: Competitors may have enough capitalization or client support to avoid bankruptcy or takeover until their manufacturing processes are optimized. Polysilicon oversupply may hurt long-range prices.


Conclusions: Low probability of polysilicon oversupply in the next few years. Polysilicon demand seems to be greater than original estimates. Upside seems to be more plausible in the short-to-medium term (2-3 years). Good medium-term investment with possibility of great long-term performance.