LDK Solar Co., Ltd. - Asia Europe Clean Energy (Solar) Advisory Co ...

RISK FACTORS
Investment in our ADSs and our ordinary shares involves a high degree of risk. You should consider
carefully the following information about these risks, together with other information contained in this
prospectus, before you decide whether to buy our ADSs.
Risks Relating to Our Company and Our Industry
Our operating history is short and may not provide you with an adequate basis upon which to evaluate
our business and prospects.
We were incorporated on May 1, 2006 to acquire our operating subsidiary, Jiangxi LDK Solar, which was
incorporated on July 5, 2005. We commenced construction of our first manufacturing plant in Xinyu Hi-Tech
Industrial Park of Jiangxi province in China in 2005. We completed the installation of our first set of
production equipment for trial runs in February 2006 and made our first commercial shipment of solar wafers
in April 2006. Our operating history may be too short to give you a sufficient basis for evaluating our business,
financial performance and prospects. We may not be able to achieve similar results or growth in future
periods. Accordingly, you should not rely on our results of operations for any prior periods as an indication of
our future performance.
If we are not able to manage our rapid growth effectively, our results of operations may be adversely
affected.
In anticipation of the growth in demand for our multicrystalline wafers, we plan to expand our business
operations significantly. The success of such business expansion and operational growth will depend upon the
improvement of our operational and financial systems, enhancement of our internal procedures and controls,
increase in our manufacturing capacity and output, and effective recruitment, training and retention of
technicians and skilled employees. In addition, we will need to maintain and expand our relationships with
customers, suppliers and other third parties. We cannot assure you that our current and planned operations,
personnel, systems, internal procedures and controls will be adequate to support our future growth. If we are
unable to manage our rapid growth effectively, we may not be able to take advantage of market opportunities,
successfully execute our business strategies or respond to competitive pressures, and our results of operations
may be adversely affected.
Failure to secure sufficient quantities of polysilicon feedstock on commercially reasonable terms could
adversely affect our results of operations and impede our business expansion plans.
Solar-grade polysilicon feedstock is an essential raw material in manufacturing our multicrystalline solar
wafers. Our operations depend on our ability to procure sufficient quantities of solar-grade polysilicon on a
timely basis and on commercially reasonable terms. Polysilicon is also an essential raw material for the
semiconductor industry, which requires polysilicon of higher purity than that for the solar industry. The
significant growth of the solar wafer industry and the competing demand and buying power of the
semiconductor industry have resulted in an industry-wide shortage in solar-grade polysilicon and a significant
increase in solar-grade polysilicon price over the past few years. According to Solarbuzz, the average price of
virgin polysilicon under long-term supply contracts increased from approximately $35 to $40 per kilogram
delivered in 2005 to $50 to $55 per kilogram delivered in 2006, and is estimated to further increase to $60 to
$65 per kilogram delivered in 2007. In addition, according to Photon Consulting, spot prices for virgin
polysilicon feedstock were $100 per kilogram in 2005, were estimated to increase to $150 per kilogram in 2006,
and are expected to further increase to $200 per kilogram in 2007 and $225 per kilogram in 2008. Currently,
we have polysilicon inventories and supply commitments that we believe will satisfy over 90% of our estimated
polysilicon requirements for 2007 and approximately 50% of our estimated requirements for 2008; however, we
only have limited polysilicon supply commitments that extend beyond 2008. Many of our polysilicon supply
agreements are subject to fluctuating market prices or price negotiations with our suppliers. In addition,
suppliers may delay or default in their delivery obligations under the supply agreements, as we have disclosed
in the risk factor ""Ì There are a limited number of suppliers of virgin polysilicon feedstock and failure or
delay by any of our polysilicon suppliers in delivering supplies to us could adversely impact our production and
delivery schedule and harm our reputation'' below. We cannot assure you that we will continue
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