Solar cell use had been growing rapidly in China, but that was mainly because of government incentives, Shi said.

Price cuts would allow the industry to flourish without artificial supports, increasing its transparency, he said in an interview.

Prices may fall by 5 to 10 percent in 2007, said China-born Shi, who spent 14 years working and studying in Sydney and became a dollar billionaire after Suntech's initial public offer in New York last December.

In February, Suntech said its average selling prices would rise 5 to 7 percent this year.

Another threat to the company's margins is the cost of the silicon used to make solar cells. Silicon prices rose nearly 50 percent last year, partly because of competing demand from the computer industry.

However, Shi added that the Wuxi-based company would not cut back production to preserve margins.

"We don't want our capacity sitting idle, so we are willing to pay more money to get more silicon," he said. "And although margins will be back a little bit, but overall profit and sales have increased quite substantially."

GREEN DRIVE

Beijing, driven by soaring oil prices, air pollution and environmental degradation, has said it wants a tenth of its energy to come from environmentally friendly sources by 2010, and offers incentives such as tax breaks to renewable energy firms.

Suntech has profited from this policy. Its share price has doubled since its US$400 million IPO, and sales jumped 165 percent in 2005 to US$226 million. Net income last year rose 55 percent to US$30.6 million.

However, Suntech expects exports to continue to account for most of its revenue in the next few years, until China formulates a more coherent solar energy policy, Shi said.

Companies including General Electric Co., Denmark's Vestas Wind Systems AS and Spain's Gamesa Corporacion Tecnologica SA, as well as homegrown China Solar Energy Holdings Ltd., are expanding capacity in China's renewable energy market.

"We do see an increase in our market share in China, in the area of solar power products such as street lamps or signal lights," Shi said, adding that Suntech had a 70 percent share of total production of its type of products in China.

Suntech's global market share is expected to reach about 7 percent this year, up from 5 percent in 2005, he said.

The company plans to spend around US$60 million to build a research and development plant outside Shanghai.

"We actually purchased a big piece of land here in the industrial park. We're going to start R&D activity, and also some new types of activity for solar cell technology," Shi said.

The plant in Caohejing Hi-Tech Park, southwest of central Shanghai, is expected to begin operating in early 2008 and will have around 200 employees, Shi added.

Suntech, which this month agreed to buy Japanese photovoltaic materials firm MSK Corp. to gain entry to Japan's solar energy market, opened its first sales office in Shanghai on Friday.

It expects to expand its global headcount to 3,000 by the end of 2007 from 2,200 now. (US$1 = 7.98 yuan)