China's SMIC plans to make polysilicon: source

SHANGHAI (Reuters) - Semiconductor Manufacturing International Corp, China's biggest contract chip maker, plans to become a maker of polysilicon, a key material for solar energy cells, a source familiar with the situation said on Thursday.

SMIC is in talks with a German company to obtain the necessary technology, said the source, declining to identify the German firm.

The location of SMIC's polysilicon plant has not been decided, but it will be in an area of China where power is relatively cheap, added the source, who declined to be named since an agreement on the technology transfer has not yet been reached.

An SMIC spokesman declined comment.

SMIC, a major maker of memory and logic chips, also manufactures crystalline cells and assembles photovoltaic panels, which are used to produce solar energy.

Several Chinese companies making solar power equipment, such as Suntech Power Holdings Co, are trying to move their operations upstream into production of key materials, in order to cut costs and obtain better control over the supply chain.

(Reporting by Sophie Taylor: Editing by Andrew Torchia/Rory Channing)