In an effort to combat rough memory market conditions by generating a new revenue stream for itself, Munich, Germany-based memory company Qimonda AG announced today that it has inked a contract with German solar company Centrosolar Group AG to jointly build, equip and operate a solar cell manufacturing plant, which will produce solar cells based on silicon.

The JV, which will be located on Qimonda’s existing site in Vila do Conde, Portugal, will be 49% owned by Centrosolar and 51% owned by Qimonda Solar GmbH, a subsidiary of Qimonda. An initial investment of $108.4 million (70 million euros) will be made by September 2009.

Qimonda said it will contribute its existing know-how in silicon-based mass production to the effort, along with its access to silicon supply. A shortage of silicon wafers is currently causing the photovoltaic industry to realign business strategies and seek alternative raw materials.

For its part, Centrosolar said it will contribute its expertise with solar systems as well as the sales and distribution of solar modules.

Subject to regulatory approvals, the companies expect fab construction at Qimonda’s site in Portugal to begin mid-year, with the facility scheduled to be ready for equipment installation early in 2009, with production slated for the second half of 2009, with a an initial capacity of up to 30 million solar cells per year -- equivalent to about 100 megawatt peak -- and employ approximately 150 employees.

In terms of the silicon access, a silicon supply agreement has been made with LDK Solar Co Ltd, based in Xinyu City, China.

Centrosolar said that with this partnership, it will be able to guarantee a competitive quality manufacturing of solar cells, which in the future will be produced in-house and destined for the company’s module production sites in Germany and the Netherlands.

“By entering the solar industry, we are addressing an attractive market with stable and high growth rates. We will leverage our core competencies in silicon-based, high-quality mass production to generate a new revenue stream for Qimonda. Together with our experienced solar partner Centrosolar we have developed a capital and resource efficient setup to start this promising new business,” said Kin Wah Loh, president and CEO of Qimonda AG concluded in a statement.