SOURCE: Hoku Scientific, Inc.

May 30, 2007 05:00 ET

Hoku Scientific Announces Progress With Construction of Hoku Materials Polysilicon Plant

POCATELLO, ID--(Marketwire - May 30, 2007) - Hoku Materials, Inc., a wholly owned subsidiary of Hoku Scientific, Inc. (NASDAQ: HOKU), established to manufacture and sell polysilicon for the solar market, today provided an update on the progress it is making with the construction of its planned polysilicon plant, and reaffirmed that the engineering, design and construction of the plant are on track for product deliveries to begin in January 2009. Specifically, Hoku Materials announced that it has drawn on its $13 million credit facility with Bank of Hawaii to pay the 15% initial deposit under Hoku Scientific's hydrogen reduction reactor purchase contract with GEC Graeber Engineering Consultants GmbH, and MSA Apparatus Construction for Chemical Equipment Ltd. for reactors capable of producing 2,000 metric tons of polysilicon per year. The payment of this initial deposit ensures that the reactors will be delivered in the second half of 2008 pursuant to the contract, which meets Hoku's plans for product deliveries to begin in 2009.

Hoku Scientific, GEC Graeber Engineering Consultants GmbH, and MSA Apparatus Construction for Chemical Equipment Ltd. also agreed to amend their hydrogen reduction reactor purchase contract, which was signed in January 2007, to extend Hoku Scientific's deadline for the establishment of an irrevocable Letter of Credit for 65% of the total contract, until September 17, 2007. In addition, Hoku Scientific and SANYO Electric Company, Ltd. have amended their polysilicon sales agreement by extending Hoku Scientific's date to complete the financing to construct its polysilicon production plant until October 17, 2007. Further, Hoku Scientific and SANYO amended their contract to clarify that Hoku Scientific only needs to raise $100 million in aggregate gross proceeds from debt or equity offerings, or from customer prepayments, to satisfy this polysilicon production plant construction financing contingency.

"The payment of our initial deposit for the polysilicon reactors demonstrates our commitment to move forward with the construction of our polysilicon facility," said Dustin Shindo, Chief Executive Officer of Hoku Scientific. "The amendments of our contracts with GEC and MSA, and with SANYO, respectively, give us more time to complete our financing and reduce the immediate pressure to finance the project. By committing capital to ensure the on-time delivery of the long lead-time items such as the reactors, we continue to stay on schedule for our planned 2009 product deliveries. We're also pleased to report that we received our pre-permit construction approval from the Department of Environmental Quality in Idaho, which allows us to commence site preparation and construction of the plant."

Heinz Graeber, Chief Executive Officer of GEC Graeber Engineering Consultants GmbH, said, "We are impressed with the progress of Hoku and are confident that our joint efforts will allow us to meet their delivery date of polysilicon in 2009."

About Hoku Scientific, Inc.

Hoku Scientific (NASDAQ: HOKU) is a clean energy technologies company that develops and manufactures fuel cell membranes and membrane electrode assemblies for stationary (including residential and back-up power applications) and automotive proton exchange membrane fuel cells. The Company is currently expanding its business to manufacture solar modules and polysilicon for the solar market. For more information visit www.hokuscientific.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve many risks and uncertainties. These statements relate to Hoku Scientific's ability to successfully raise sufficient funds to establish polysilicon manufacturing facilities within the time required in its contracts with SANYO Electric Co., Ltd., GEC Graeber Engineering Consultants GmbH, and MSA Apparatus Construction for Chemical Equipment Ltd., or at all; its ability to engineer and construct a production plant for polysilicon; its ability to manufacture polysilicon; its ability to meet the delivery schedule in its customer contracts; it's ability to successfully achieve the milestones in its contract with SANYO Electric, Co., Ltd.; the ability of GEC Graeber Engineering Consultants GmbH and MSA Apparatus Construction for Chemical Equipment Ltd to meet the delivery schedules in their agreement with the Company; the Company's ability to license any necessary intellectual property rights to enter the polysilicon business; the quality of polysilicon to be manufactured; Hoku Scientific's costs to manufacture polysilicon, and its ability to offer pricing that is competitive with competing products; Hoku Scientific's future financial performance; Hoku Scientific's business strategy and plans; and objectives of management for future operations. In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause Hoku Scientific's actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. In evaluating these statements, you should specifically consider the risks described in Hoku Scientific's filings with the Securities and Exchange Commission. Except as required by law, Hoku Scientific assumes no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Hoku, Hoku Solar, Hoku Materials and the Hoku Scientific logo are trademarks of Hoku Scientific, Inc., all rights reserved.

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