MEMC Electronic Materials (NYSE:WFR) supplies silicon wafers to semiconductor and photovoltaic cell companies. Its success is deeply rooted in the success and growth of the market for semiconductors, which is in turn fueled by a growing demand for mobile phones and solar power. Solar power in particular has been growing quickly as oil prices, environmental concerns, and government support for clean and renewable energy have all increased.

Silicon wafers are commodity goods, meaning they are difficult to differentiate in any way other than price. Thus, while a worldwide silicon shortage is currently lifting the fortunes for all players in the industry, in the long run, price competition with competitors like Hemlock, Shin-Etsu, M. Setek, and DC Chemical can undercut MEMC's profit margins. To try and reduce this threat, MEMC has hedged some of its positions against falling semiconductor prices, including a multimillion dollar agreement to supply China's Suntech Power Holdings (STP), a solar power company, with silicon wafers over the next 10 years.

(Read more at Wikinvest )