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AMSC China Established to Serve Asia-Pacific Wind Energy, Power Grid and Industrial Markets

American Superconductor Corporation, a leading energy technologies company, announced today that it has formed a new division known as "AMSC China" to serve the growing wind energy, power grid and industrial markets in China.

The company recently received an enterprise business license from the Chinese government to form a Wholly Foreign Owned Enterprise in Suzhou National New and Hi-Tech Industrial Development Zone (SND), located 80 kilometers west of Shanghai. The business license allows for domestic manufacturing and sales of AMSC's proprietary power electronics and superconductor products. AMSC also has expanded its sales and field service office in Beijing to support and grow its business in China and the broader Asia-Pacific region. AMSC China, which currently employs 25 Chinese citizens, is expected to enable AMSC to better serve its local customers while also reducing costs.

"With its rapidly growing economy and increasing energy demands, China has become a key target market for AMSC in recent years," said Greg Yurek, founder and chief executive officer of AMSC. "Today, approximately half our revenues are coming from the Asia-Pacific region, with China accounting for the largest fraction of those sales.

By serving these markets locally, we believe we will foster stronger ties with our current customers and more rapidly develop new customers in the region. We also expect to be able to reduce costs for standard products like our PowerModule(TM) power converters by locally sourcing, assembling and testing certain non-proprietary components."

AMSC's PowerModule product is a programmable, scalable power converter that utilizes a proprietary printed circuit board design, which allows the use of standard electronic manufacturing techniques for consistent, automated product assembly. It is one of the core electrical components AMSC is selling to wind turbine manufacturers in China and the Asia-Pacific region.

Since introducing the PowerModule product in 2004, AMSC has produced and shipped more than 1,500 of these units from its Wisconsin operations. A majority of AMSC's PowerModule converters are being sold in China today. To satisfy increasing demand, AMSC is supplementing its Wisconsin operations by establishing manufacturing operations in the SND industrial park, which is also home to many of the component vendors needed for its PowerModule power converters.

In parallel, AMSC is now producing next-generation PowerModule power converters as well as its D-VAR(R), PQ-IVR(TM) and Static VAR Compensator ("SVC") power grid and industrial power quality offerings at its Wisconsin and Pennsylvania operations. "We have been expanding our operations in the U.S. to meet the growing demand for these products," said Yurek. "In time, we expect to also begin producing these higher power systems in China to recognize additional cost savings and better serve the local utility, industrial and wind markets. The need for D-VAR, PQ-IVR and SVC solutions in the Asia-Pacific region is quite significant, and AMSC China will serve as our channel into this market. At the same time, we will take the steps necessary to protect our intellectual property, including maintaining production of the encrypted control cards for these systems in the United States."

Increasing Customer Demand in the Asia-Pacific Region

AMSC today reported that it has received an initial order for wind turbine electrical systems from a second Chinese turbine manufacturer - Zhuzhou Electric Locomotive Research Institute (ZELRI). ZELRI will install these systems in the first 10 wind turbines rated at 1.65 megawatts (MW) it expects to produce under a license it purchased from AMSC's Windtec division in January 2007.

"ZELRI is now beginning to emerge from the prototype to the manufacturing phase for wind turbines," said Yurek. "Similar to Sinovel Wind, which has ordered more than 2,500 sets of core electrical components from AMSC since its first order for 20 sets in November 2005, we expect that this will be the first of many electrical system orders we receive from ZELRI as it scales production in the years ahead. The same can be said for China's Dongfang Steam Turbine Works Corporation (DTC) and South Korea's Doosan Heavy Industries & Construction Co. As we reported previously, the latter companies plan to commence series production of turbines utilizing our designs and electrical systems by the end of 2009."

AMSC said it expects to expand sales of its products beyond the wind energy market in the Asia-Pacific region. In the industrial sector, the company recently announced that a semiconductor chip manufacturer placed an order for AMSC's PQ-IVR system for one of its large wafer fabrication facilities in Southeast Asia.

In the electric utility market, AMSC formed a strategic business alliance with Shanghai Electric Cable Research Institute (SECRI), which is one of two Chinese entities that certify all new power cable technology for China. This alliance is aimed at developing and promoting the use of high temperature superconductor (HTS) power cables in China to help transmit and distribute increasing quantities of electric power needed to support the growing Chinese economy. "We believe our business alliance with SECRI will soon lead to a successful prototype HTS power cable and that this will be the precursor to an in-grid demonstration in China in the next few years," said Yurek. "China represents a significant market for our HTS wire and AMSC China will play a key role in developing this market. We believe this same strategy can be replicated in other countries."

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