China's Suntech Power Holdings Co. (STP) expects the first-quarter performance of the solar cell industry to be flat or slightly lower than the fourth quarter of 2008, Suntech Chairman and Chief Executive Zhengrong Shi said Tuesday.

He expects performance to pick in the second and third quarters.

Suntech Power, the world's largest producer of photovoltaic panels by revenue, swung to a fourth-quarter loss on plunging margins and an inventory write-down.

The company posted a net loss of US$65.9 million, or a loss of 42 cents per American Depository Share, in the fourth quarter, compared with a net income of US$50.6 million, or 29 cents for each ADS, a year earlier. The latest results include a US$50.7 million inventory write-down. Excluding the write-down and other items, the loss was 27 cents a share.

Revenue increased 4.2% from the fourth quarter of 2007 to US$414.4 million.

"We shouldn't depend solely on the U.S. market for a recovery (of the industry). That would be a great risk," Shi said on the sidelines of a two-day cross-strait solar energy forum in Taipei.

"More importantly, we shouldn't lower our prices (of polysilicon) irrationally. This will cause confusion to the industry."

He said prices of polysilicon should be maintained above US$60 per kilogram to be profitable.

The current situation of an oversupply of polysilicon may only be resolved in 2011, when demand becomes stronger alongside an expected recovery in the global economy, Shi said.

Relations between China and Taiwan have improved since the Kuomintang government took office last year, Shi said, adding that he sees more opportunities to work with Taiwan in the solar energy industry.

Shi said he doesn't expect Suntech Power to set up factories or invest in Taiwan in the near future because "the time isn't ripe," but added there are other ways to cooperate. For instance, China could supply Taiwan with polysilicon, a raw material that China has an abundance of, while Taiwan could sell wafers to China.

-By Wei Yi Lim, Dow Jones Newswires; 88622 502-2557; weiyi.lim@dowjones.com