SUNTECH & the Western World

Presented by:Devan van Niekerk & Kevin Anderson

Solar Photovoltaic Farm

General Background“The sun delivers enough energy in one hour to meet the global energy needs for

an entire year...”

“We are like tenant farmers chopping down the fence around our house for fuel when we should be using Natures inexhaustible sources of energy — sun,

wind and tide.... I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait until oil and coal run out before we

tackle that.” (Thomas Edison, 1931)

Napoleon Bonaparte once said of China, "Let her sleep, for when she wakes, she will shake the world."

SUNTECH Background• Founded 2001 by Dr. Zhengrong Shi• Suntech designs, develops, manufactures, and markets a variety of high

quality, cost effective and environmentally friendly solar products for electric power applications in the residential, commercial, industrial, and public utility sectors

• Offices in 13 countries• Head Office: Wuxi (Jiangsu Province – China)• Solar Installation in over 80 countries• Listed on the New York Stock Exchange (NYSE: STP)• Market Capitalisation: USD 1.31 Billion

Who are the Solar Customers?“The Solar Industry lives everywhere under the Sun”

*Fragmented Market*

Defined by:1. Countries with energy demand

2. CO2 Reduction3. ‘Green Collar’ Labour Force

Who are the Suppliers?

• Value Chain Analysis:• Silicon Supplier

– MEMC (United States) (NYSE)

Who are the Competitors?

• First Solar (United States)• Q-Cells (Germany)• Hyundai (Korea)• Siemens (Germany)• TATA / BP Solar (India)• Yingli (China)• LDK Solar (China)• Trina Solar (China)• (80+ Other Companies)

Market Capital Size (USD) %

8%

68%

10%

3%

11%

Market Capital Share

SuntechFirst SolarYingliQ-CellsTrina

Manufacturing Expansion2008 to 2011

First Solar Q-Cells Suntech Trina Solar Yingli0

500

1000

1500

2000

2500

3000

Capacity (MW)

What are the key success factors?

1. Cost Effective @ lower solar panel cost production (Moore’s Law of electronics)

2. Optimized supply chain and manufacturing process to build at scale3. Export focused4. Expanded investment in end user markets5. R&D (350 + dedicated PV Scientists)6. Low capital expenditure for production lines7. Utilization of leading international production equipment8. Combination of relatively low-priced Chinese equipment9. Securitization of silicon wafers – Future Contracts10. Relationship with upstream and downstream participants11. Strong distribution and supply network (13 Global Offices)12. Mature development allows for quicker commercial implementation13. Long standing relationship with University of New South Wales in Australia

(Intellectual Property Growth)14. Good Global and established track record of high-quality consistent products15. Good historic client referrals

How are these KSF mastered by SUNTECH?

• Continuous Intellectual Property Development – (R&D)• Quasi State Funding (China Development Bank – Letter of Credit

USD 11.7 billion)• Technology Advancement – Continuous Patent Design (R&D)• Economies of scale (1st Mover Advancement) (Established 2001)• Global Growth Demand for Solar Energy (Global Warming, Kyoto

Protocol, Copenhagen Accord, Cancun COP 16, etc)• Low barriers of entry (under immense pressure) (Entry of

companies such as Kyocera, Hyundai, Sharp, Siemens, etc)

SUNTECH Challenges• Paradigm Shift – New Local & Global Suppliers• Quality of solar module being questioned...• Legal terms of contracts being questioned...• Quasi State Funding (China Development Bank / China Construction Bank, ICBC, etc) offered to other Chinese Multi Nationals (e.g. Trina Solar, LDK Solar, Solarfun, Yingli Solar. Etc.)• Current Market Cap = $1.31 billion VS. Market Cap (2008) + $10 billion• Western ‘Sales Culture’ Adaptation• USA - New Import ‘Tariffs’ on Solar Panels• “Global Localisation Content Protection”• Reverse colonisation – Western World cautious of Chinese ‘Bullish’ approach• Advanced solar technologies (Suntech Pluto Technology – 19% Efficiency)• The success of Suntech is a story of the embodiment of the ancient Chinese wisdom of "perfect timing, advantageous location, and kind assistance from government...”