(Yicai Global) Nov. 4 – Shares of Jingyuntong Technology soared by the daily limit after the Chinese solar power equipment maker said it will spend CNY1 billion (USD160 million) to acquire a stake in Tongwei's upcoming plant in southwestern China to secure its raw material supply.

JYT’s [SHA: 601908] shares jumped 10 percent to CNY11.95 (USD1.90) intraday. The equity price is more than 10 percent up this year.

JYT will purchase a 34-percent stake in a high-purity crystalline silicon project that Tongwei is building in Sichuan province, the Beijing-headquartered investor said in a statement yesterday.

The solar power boom has caused many Chinese firms in the sector to boost their upstream supply chain investments to ensure enough raw materials amid rising prices.

Chengdu-based Tongwei will hold 51 percent of the project company's equity after the transfer. Another investor, JinkoSolar Holding, will buy a 15-percent stake in it for CNY450 million (USD70.29 million). The joint venture's registered capital will thus rise to CNY3 billion.

JYT joined the group of investors to ensure its supply of raw materials for the company’s downstream solar business and to keep its production costs reasonable, it added. The JV will provide JYT and JinkoSolar with products roughly in a 70:30 ratio, it added.

The maker of silicon rods and ingots has an apparent need for more raw materials. Last June, JYT kicked off production at its new solar wafer project in Sichuan province's Leshan, according to its website.

Tongwei revealed the capacity expansion plan regarding the above-mentioned project in July. After an investment of CNY7 billion, the facility should be able to reach an annual output of 100,000 tons of the solar cell material by December 2022.

Editor: Emmi Laine, Xiao Yi