Wacker+PV+Case,+December+21,2008

Wacker+PV+Case,+December+21,2008 - Department of Management...

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1 Department of MS&E-002-2008 Management Science and Engineering December 21, 2008 WACKER Invests in Sustainable Production of Solar Silicon for the Photovoltaic Industry 1 In August 2007, WACKER Chemie AG, a globally active chemical company headquartered in Munich, Germany announced that it planned to set up two joint ventures with SCHOTT Solar GmbH 2 , a wholly-owned subsidiary of SCHOTT AG, to produce and market silicon wafers for the solar industry. WACKER and SCHOTT planned to invest a total of €370 million in their German sites at Jena (Thuringia) and Alzenau (Bavaria), creating at least 700 new jobs. The joint venture – WACKER SCHOTT Solar GmbH – would produce multicrystalline silicon ingots and wafers – the starting material for solar photovoltaic (PV) cells. The unique joint venture aimed to unleash considerable synergies between the two companies where SCHOTT contributed its plant and production technology for manufacturering of solar cells while WACKER supplied its wafering know-how and the required polysilicon. Solar wafer production capacity would expand in stages and reach around one gigawatt per year by 2012, establishing the joint venture as one of the five biggest solar wafer manufacturers in the world. Forward integration into solar-wafer production was vital to WACKER’s strategy of creating added value in the high-growth photovoltaic sector. As the world’s second largest supplier of polysilicon and one of the leading manufacturers of silicon wafers for semiconductors and microelectronics, the WACKER Group’s forward integration strategy positioned the company to make another substantial contribution to the long-term, sustainable growth of the solar industry. The original plan for an increase in solar wafer production capacity was proposed by the WACKER POLYSILICON Business Division ten years earlier in 1996 but it was not approved by Corporate Management. Investing in sustainable manufacturing and in products that 1 Professors Robert Carlson, Feryal Erhun and Dariush Rafinejad of Stanford University Management Science and Engineering Department prepared this case in collaboration with Dr. Klaus Blum, Vice President, Chemical Services, Wacker Chemie AG , in Burghausen, Germany as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright© 2008 by the Board of Trustees of Leland Stanford Junior University. All rights reserved. 2 A brief description of Wacker and SCHOTT AG is provided in Appendix I.
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2 contribute to sustainable development has long been a strategic vision of WACKER; however, in 1996 the company deemed the PV market conditions too risky for a major investment. After the 2007 announcement, the general manager of the POLYSILICON Division reflected on the extraordinary growth of the solar energy market and the acute shortage of silicon wafers in the past several years. He wondered how different WACKER’s position in the PV market would
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Wacker+PV+Case,+December+21,2008 - Department of Management...

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