Hoku and the City of Pocatello signed a 99-year ground lease last week, and Hoku expects to begin construction within the next several weeks after the city obtains an easement ensuring Hoku's unrestricted access to the property.

Hoku says it expects to finish construction in the second half of 2008, with polysilicon shipments planned for the first half of 2009. Polysilicon is the key material used in the production of solar cells and integrated circuits.

"Groundbreaking is another significant step forward for Hoku's polysilicon business," said Dustin Shindo, chairman and chief executive officer of Hoku Scientific. "Less than one year ago we publicly announced our plans to enter this business, and here we are today breaking ground on a 2,000 metric ton per year production plant. I am very proud of what our team has accomplished in such a short amount of time."

Shindo was joined at the groundbreaking ceremony by Karl Taft, Hoku chief technology officer, and C.L. "Butch" Otter, Governor of Idaho; Roger B. Madsen, Director, Idaho Commerce & Labor; Roger Chase, Mayor of Pocatello; and Larry Ghan, Chairman, Bannock County Commissioners.

"It's terrific to see how quickly Hoku is moving forward," said Roger Chase, Mayor of the City of Pocatello. "We're really looking forward to the completion of Hoku's polysilicon production plant and its contribution to the greater Pocatello community and economy."

Hoku estimates that the total cost to bring the facility online includes approximately $260 million to construct the facility, plus working capital and start-up costs. SANYO has agreed to pay approximately $110 million upfront through prepayments for products, which will be paid to Hoku as certain production and quality milestones are achieved. Hoku plans to finance the balance of the construction costs through additional customer prepayments and debt.

Hoku also announced today that it has awarded a contract to VECO USA, Inc. to provide engineering and related services for Hoku Materials' planned polysilicon production plant. The total value of the contract was not disclosed. Hoku elected to end its engineering services contract with CH2M Hill Lockwood Greene that was announced in August 2006, and award this new contract to VECO. Hoku expects that VECO will provide complete engineering, procurement and construction services for the polysilicon plant from design through construction and start-up.

"We greatly appreciate the professional service we received from CH2M Hill,and hope to work with them again in the future," said Dustin Shindo. "VECOis a highly respected global engineering and construction firm with polysilicon plant experience. We're excited to be working with them."