(Yicai Global) Aug. 16 -- Shares in Wuxi Shangji Automation surged as much as 8.6 percent today after the Chinese solar wafer maker said it will spend CNY15 billion (USD2.2 billion) to build a photovoltaic industrial park in eastern Jiangsu province as the solar panel market booms.

Shangji's share price [SHA:603185] was trading up 6.5 percent at CNY183.30 (USD27) as of 2:15 p.m. China time. Earlier in the day it hit CNY186.86, the highest point since mid-December last year.

The facility, to be located in the city of Xuzhou, will have an annual capacity of 25 gigawatts of silicon wafers as well as 24 GW of high-efficiency N-type crystalline silicon photovoltaic cells, the Wuxi, Jiangsu province-based company said yesterday. The production of PV cells is the firm’s first foray into the downstream supply chain.

The plant, which is expected to be completed by 2025, will be built in three phases. First, the solar wafer plant will be constructed, then the photovoltaic cell facility will go up with an annual capacity of 14 GW that will then be expanded to 24 GW in the third phase, it said. A project company will be set up to invest and oversee the construction of the park.

Shangji has been rapidly expanding capacity of monocrystalline silicon wafers, a key raw component of silicon cell and an important source of profit for the firm. Its yearly output soared to 30 GW at the end of last year from 12GW at the beginning of the year.

To meet surging demand, Shangji has been extending its solar wafer output at its new Baotu base in northern Inner Mongolia Autonomous Region by adding more production lines. Last year it started obtaining long-term orders from battery manufacturers and in March alone, it received two long-term orders worth CNY7.9 billion (USD1.2 billion).

To offset the cost of increasingly expensive solar panel raw materials, Shanghai said in February that it will invest CNY11.8 billion (USD1.9 billion) to build a new plant in energy-rich Inner Mongolia to make 150,000 tons of high-purity industrial silicon and 100,000 tons of high-purity polysilicon per year.

Industrial silicon is a raw material to make polysilicon which is used to produce Shangji’s primary product, monocrystalline silicon wafers. Prices of polysilicon almost tripled last year due to robust demand, creating great raw material cost pressures for wafer makers like Shangji.

Editor: Kim Taylor