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

to procure supplemental facilities, such as a ventilation system, air purification system, water station and waste
water treatment station, as needed in our expansion plan.
Manufacturing technologies
We have been improving our technologies and expertise to clean and optimize the mix of polysilicon
feedstock of different grades and to ensure and improve our polysilicon yield. We use wire saws rather than
band saws in our squaring. This enables us to reduce silicon material loss in the squaring processes, or kerf
loss. We have purchased automatic wafer cleaning and sorting equipment to improve sorting efficiency and
reduce breakage.
We recover some of our slurry through third-party service providers. We have also purchased slurry
recovery systems from HCT Shaping and GT Solar to recover the slurry internally. In January 2007, we
installed our first line of the slurry recovery systems. We intend to install additional slurry recovery systems as
we expand our production capacity. The slurry recovery ratio of these systems is over 75%. Through additional
research and development, we will endeavor to recycle and re-use as many of our production consumables as
possible. This is not only a cost reduction measure, but also an important part of our environmentally friendly
program.
Quality Control
We adhere to a strict system of quality control over our operations, from the sourcing of raw materials to
production and delivery. We have established quality-control at each stage of our production process to closely
monitor the quality of our production and to ensure that our solar wafers and ingots meet all our internal
benchmarks and customers' specifications. In addition, we have established a quality documentation system
for all purchasing, production and sales units and implemented procedures for constant improvement and flaw
prevention. Our senior management team is actively involved in setting quality control policies and monitoring
our quality control performance. However, it is impossible to avoid product defects. As we have disclosed in
the ""Risk Factors Ì Risks Relating to Our Company and Our Industry Ì Product defects could result in
increased costs, damage to our reputation and loss of revenues and market share'' in this prospectus, we
encounter periodic sales returns in our ordinary course of business due to improper cleaning, non-conformity
with customers' specifications or product defects.
As of March 31, 2007, we had a core quality management unit consisting of 146 persons overseeing our
quality control processes, audits and engineering. In addition, this unit runs the testing procedures at the
quality-control checkpoints during the production process of multicrystalline wafers and ingots. We purchase
raw materials from trusted suppliers on our approved vendor list whenever possible and only those suppliers
that pass our assessment are admitted to our approved vendor list. Raw materials are inspected by our quality
management unit. Raw materials which fail to pass our incoming inspection are returned to the suppliers. At
each stage of the production process, we conduct tests to ensure quality and compliance with all our internal
production benchmarks. We conduct infra-red scans for impurities, as well as resistivity and life-time tests, on
our ingots and multicrystalline blocks before proceeding to the next production step. We then conduct a final
quality check after all wafers are cleaned and prior to packaging. Following completion of the production
process, our products are inspected and tested thoroughly in the form of an output quality check to ensure that
all customers' specifications are met before our products are delivered to customers.
We are currently implementing an ISO9001 Quality Assurance system at our production facilities. Our
quality assurance and quality control procedures, together with our corporate standards established for the
quality checks exercised by our quality management unit, are compliant with ISO9001 requirements as well as
our own internal quality guidelines. We expect to obtain the ISO9001 Quality Assurance Certification in
2007.
Customers, Sales and Marketing
Our customers currently comprise some of the industry leaders in the photovoltaic cell and module
sector, both within and outside China. They include BP Solar, China Sunergy Co., Ltd., Chinalight, CSI,
E-Ton, GE Energy, Mosel Vitelic, Motech, Q-Cells, Solarfun, Solartech Energy, Solland Solar and Suntech.
Historically, the majority of our sales have been in China. However, we have been enhancing and broadening
75