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

photovoltaic cell or modules, and we have entered into non-competition agreements with some of our
customers, pursuant to which we have agreed not to engage in the production of solar cell or modules based on
current wafer technology for the next 10 years.
We believe that the key competitive factors in our solar wafer market include:
‚ cost competitiveness and price;
‚ continuous access to polysilicon feedstock;
‚ product quality;
‚ economies of scale;
‚ advanced technology and manufacturing processes; and
‚ strong global distribution channels.
Some companies have spent significant resources in the research and development of proprietary solar
technologies that may eventually produce photovoltaic products at costs similar to, or lower than, those of
multicrystalline wafers without compromising product quality. For example, they are developing or currently
producing photovoltaic products based on thin film photovoltaic materials, which require significantly less
polysilicon to produce than multicrystalline solar products. These alternative photovoltaic products may cost
less than those based on multicrystalline technologies while achieving the same level of conversion efficiency.
The solar industry in general also competes with other sources of renewable energy and conventional power
generation.
Property
We both own and lease properties for our operations. When we state that we own certain properties in
China, we own the relevant land use rights because land is owned by the PRC state under the PRC land
system.
Owned property
We own the land use rights to the underlying parcel of land for our manufacturing facilities located at the
Hi-Tech Industrial Park, Xinyu city, Jiangxi province of China. As of March 31, 2007, the total site area that
we owned was approximately 357,815 square meters for an original term of 50 years expiring on May 20, 2055,
renewable upon its expiration. The gross floor area of our plants in Xinyu Hi-Tech Industrial Park was
approximately 73,869 square meters as of March 31, 2007 and is expected to increase to approximately
102,151 square meters when we complete the new plant in the third quarter of 2007. We occupy our owned
properties for purposes of manufacturing, research and development and as a headquarter office and employee
living quarters.
Leased property
We currently sub-lease 208 square meters of office space in Shanghai from Suzhou Liouxin free of
charge. This sub-lease will expire in November 2007. See ""Related Party Transactions Ì Sublease of
Property'' in this prospectus.
Intellectual Property Rights
We have developed various production process related know-how and technologies in-house. In addition,
we have embarked on a number of research and development programs, including our collaboration with
Shanghai Jiaotong University, with a view to developing techniques and processes that will improve conversion
efficiency and product quality. We currently do not have any patents or patent applications pending in China
or elsewhere. We rely on nondisclosure agreements, trade secrets and technical know-how to protect our
intellectual property and proprietary rights. We have entered into confidentiality, assignment of inventions and
non-competition agreements with our executive employees, engineers and technicians. We have also entered
into confidentiality arrangements with other employees, suppliers and distributors. Pursuant to the confidentiality,
assignment of inventions and non-competition agreements, our senior employees, engineers and
technicians have agreed and acknowledged that we own the rights to all technology, inventions, trade secrets,
80