Hoku: Ten-Year Polysilicon Supply Agreement

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Hoku Materials, Inc., a wholly owned subsidiary of Hoku Scientific, established to manufacture and sell polysilicon for the solar market, and Shanghai Alex New Energy Company, Ltd. (Alex), a manufacturer of crystalline silicon solar cells, modules and photovoltaic (PV) products, today announced the signing of a definitive contract for Hoku's sale and delivery of polysilicon to Alex over a ten-year period beginning in early 2010.

Hoku's contract with Alex represents the resale of a portion of the polysilicon production capacity recaptured by Hoku after agreeing to amend its original supply agreement with Jiangxi Jinko Solar Company (Jinko). Hoku will make its first shipment of polysilicon to Alex in the first half of 2010, and will ship the remainder over a ten-year period at set prices that will decline throughout the term of the agreement.

Prior to establishing its contract with Hoku, Alex had reached an agreement with Jinko whereby Alex would purchase some of the polysilicon Jinko was to receive from Hoku, in exchange for underwriting a portion of Jinko's prepayment deposits. At the request of both Jinko and Alex, Hoku formally assigned this additional capacity to Alex under the new agreement.

As a result, Hoku also announced today the signing of a second amendment to Jinko's polysilicon supply agreement. The amendment reduces the total volume of polysilicon to be sold by Hoku to Jinko and reduces their prepayment obligation to $20 million, including the $15 million previously paid to Hoku, but leaves the other terms of the contract unchanged. As amended, the contract continues to provide for Hoku's first shipment of polysilicon to Jinko in the second half of 2009, and Hoku's option to receive discounted wafer manufacturing (tolling) services from Jinko for up to a certain amount of polysilicon each year for the ten years of the agreement.

According to the terms of the new agreements with Alex and Jinko, up to an aggregate combined total of approximately $238 million may be payable to Hoku during the ten-year period, subject to product deliveries and other conditions. The take-or-pay contracts both provide for the delivery of predetermined volumes of polysilicon each year, with combined prepayments for product in an aggregate amount of $40 million, of which $22 million has been paid to date; $15 million from Jinko and $7 million from Alex. Hoku has granted both Jinko and Alex a security interest in its polysilicon assets to secure Hoku's obligation to repay each company's prepayments as a credit against product shipments over time. Table 1 below summarizes the key terms of Hoku's agreements with Jinko and Alex.


Table 1 - Summary of contract changes

                    As Previously
Terms & Conditions    Amended                  New Agreements
                    ------------- -----------------------------------------
Customer                Jinko         Jinko         Alex        Combined
                    ------------- ------------- ------------- -------------
Term                  10 years      10 years      10 years      10 years
                    ------------- ------------- ------------- -------------
First shipment      2nd half 2009 2nd half 2009 1st half 2010       -
                    ------------- ------------- ------------- -------------
Total contract
 value              $ 178 million $ 119 million $ 119 million $ 238 million
                    ------------- ------------- ------------- -------------
Total prepayments   $  33 million $  20 million $  20 million $  40 million
                    ------------- ------------- ------------- -------------

Alex, through its PV module manufacturing subsidiary, has also agreed to provide Hoku with discounted original equipment manufacturing (OEM) services for up to a certain amount of PV modules per year for each of the ten years of the contract term. The OEM manufacturing service will be at Hoku's sole option and will be priced at Alex's most preferred rate. Together with Hoku's wafer OEM option from Jinko, this OEM option from Alex effectively provides Hoku with a low-cost, near-term strategy for vertical integration.

"Alex New Energy is an innovative, diversified company and an emerging leader in the solar industry," said Dustin Shindo, chairman and chief executive officer of Hoku Scientific. "Hoku is very pleased to have established this long-term relationship in a manner that will benefit all three companies -- Hoku, Jinko and Alex. We are also enthusiastic about the opportunity to expand our new partnership further through OEM module manufacturing. Over time, we believe this could provide significant competitive advantage to Hoku Solar, our PV systems integration subsidiary. Hoku continues to see these types of reciprocal relationships as an excellent way to strengthen our long-term business while adding value for our customers and partners."

"Alex looks forward to a long and mutually-beneficial business relationship with Hoku and we are very pleased to have established a direct supply relationship with them," said Alex's president, Lian Wen Zhang. "Alex is committed to producing only the highest quality photovoltaic products, and we are confident in our selection of Hoku as one of our key suppliers."

"Hoku has gone the extra mile to support Jinko," said Jinko chairman, Xiande Li. "By working with us to redistribute production capacity between Alex and Jinko, Hoku continues to demonstrate their flexibility and commitment to our relationship."

Hoku confirmed that a small amount of Jinko's original production capacity remains available for sale. The Company reported that it was in discussions with other potential customers for the possible resale of this recaptured polysilicon capacity, which would include additional prepayments for products.

Mr. Shindo commented, "As planned, we have begun reselling the production capacity that became available after our first contract amendment with Jinko. We continue to work with potential customers who, like Hoku, believe that a reliable, long-term supply of low-cost, high quality polysilicon will be essential to maintaining their competitive advantage going forward."

About Hoku Scientific, Inc.

Hoku Scientific (NasdaqGM:HOKU - News) is a diversified clean energy technologies company with three business units: Hoku Materials, Hoku Solar and Hoku Fuel Cells. Hoku Materials plans to manufacture, market, and sell polysilicon for the solar market from its plant currently under construction in Pocatello, Idaho. Hoku Solar markets, sells, and installs turnkey photovoltaic systems in Hawaii. Hoku Fuel Cells has developed proprietary fuel cell membranes and membrane electrode assemblies for stationary and automotive proton exchange membrane fuel cells. For more information visit www.hokucorp.com.

Hoku ®, Hoku Scientific ®, Hoku Solar(TM) and Hoku Fuel Cells(TM) are trademarks of Hoku Scientific, Inc., and Hoku Materials(TM) is a trademark of Hoku Materials, Inc.

About Shanghai Alex New Energy Company, Ltd.

Shanghai Alex New Energy Company, Ltd. and Shanghai Alex Solar Energy Science and Technology Company, Ltd. are solar industry holding companies and subsidiaries of Shanghai Huayi Enterprises Group in China. The two companies and their subsidiaries are comprehensively engaged in R&D, manufacturing, sales and technical service of crystalline silicon solar cells, modules and other photovoltaic applications, systems and products. Alex Solar Modules Co., Ltd., produces solar panels that are CE and TUV certified, and designed and produced in strict compliance with IEC and ISO quality and environmental standards. Alex Solar Cell Co., Ltd., produces high efficiency crystalline silicon solar cells. In aggregate, Alex currently has 50MW of monocrystalline and polycrystalline solar cell and module production capacity, but expects to increase production up to a total of 150MW in 2009. Alex also plans to establish up to 150MW of production capacity for multicrystalline solar cells and modules by 2010. For more information, visit www.alex-newenergy.com

Shanghai Huayi Enterprises Group is a privately-held, diversified consortium of nine holding companies and two joint ventures. Group subsidiaries are active in a variety of lines of business, including: management, manufacturing, construction, trade, investment, real estate, and energy. The Group is headquartered in China, and is active both domestically and internationally in New Zealand and Hong Kong.

About Jiangxi Jinko Solar Company, Ltd.

Jiangxi Jinko Solar Co., Ltd. is one of the largest emerging manufacturers of solar industry silicon products and semiconducting materials in China. Specializing in the production of silicon ingots, blocks and wafers, Jinko Solar's silicon industry assets currently include mono-crystalline furnaces, polycrystalline ingot casting furnaces, wire cutting and chipping equipment, and related production facilities, among others. Jiangxi Jinko Solar Company, Ltd. is a privately-held, overseas funded, high technology enterprise whose investors include Hong Kong Paker Technology Company, Ltd. For more information, visit www.jinkosolar.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve many risks and uncertainties. These statements relate to the engineering, procurement, and construction of Hoku Materials's planned polysilicon production plant; Hoku Materials's ability to successfully derive revenues from the sale of polysilicon to Shanghai Alex New Energy Company, Ltd. and Jiangxi Jinko Solar Company, Ltd., respectively; the timing of when Hoku Materials expects to receive an aggregate of $18 million in prepayments from Shanghai Alex New Energy Company, Ltd. and Jiangxi Jinko Solar Company, Ltd.; the ability of Hoku Materials to engineer and construct a production plant for polysilicon; its ability to produce polysilicon; its ability to meet the delivery schedule in its agreements with Shanghai Alex New Energy Company, Ltd. and Jiangxi Jinko Solar Company Ltd.; its ability to enter into new contracts for the sale of polysilicon, and to obtain prepayments from any new customers; Hoku Scientific's strategy to vertically integrate its solar business; Hoku Scientific's future financial performance; its business strategies and plans; and objectives of management for future operations. In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause Hoku Scientific's actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. In evaluating these statements, you should specifically consider the risks described in Hoku Scientific's respective filings with the Securities and Exchange Commission, as applicable. Except as required by law, Hoku Scientific assumes no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.


Contact:

     For more information contact:

     Hoku Scientific, Inc.
     1288 Ala Moana Blvd., Honolulu, Hawaii, 96814, USA
     Tel: +1-808-682-7800
     Fax: +1-808-440-0357
     Email: Email Contact
     http://www.hokucorp.com

     Shanghai Alex New Energy Company, Ltd.
     111-3111 Huan Cheng Xi Lu, MinHang Exporting Processing Zone
     FengXian District, ShangHai P.R.China
     Tel: +86(21)57443995
     Fax: +86(21)57442247
     http://www.alex-newenergy.com

     Jiangxi Jinko Solar Company, Ltd.
     Jinko Road, Xuri District, Economic Development Zone, Shangrao, China
     Tel: +86-793-8469699
     Fax: +86-793-8461152
     http://www.jinkosolar.com

Source: Hoku Scientific, Inc.
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