In preparation for growth of its 2008 wafer production LDK increased its inventory to $380 million at the end of 2007.
Inventory in transit represented the most significant portion of the increase, growing from 263 metric ton (MT) to 752MT during the quarter as the company purchased silicon material from around the globe.
Approximately 8% or $30 million of LDK’s inventory at the 2007 year-end was classified from an accounting perspective as non-current due to the expectation that these materials would be consumed over a period longer than one year.
The company expects that the blending ratios of the non-current inventory will significantly change, increasing consumption of the non-current inventory as LDK Solar ramps up production of its own polysilicon, and as more virgin polysilicon and higher resistivity feedstock become available.
The higher inventory balance is reportedly an important factor in present and future cost reduction strategies at LDK Solar.
