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Solar encapsulant provider STR Holdings Inc. says it expects that First Solar Inc., a long-standing customer, will terminate its relationship with the company this year.

Though the exact timing remains uncertain, STR Holdings believes that First Solar will begin a transition away from STR in the first quarter, completely cutting over to a new supplier during the course of the next few months.

First Solar is STR's largest customer, and such a loss is likely to have a materially adverse effect on STR's business and financial results, the company says. Sales to First Solar during 2012 were approximately $39 million.

"We have had no claim for defective product from First Solar, nor have we had any returns, and the product we have been supplying for years has been according to specification," says Robert S. Yorgensen, president and CEO of STR.

As a result of the First Solar loss, STR plans to cease manufacturing operations at its East Windsor, Conn., facility by the end of the first quarter and make significant headcount reductions throughout the organization. The company plans to service its North American customer base from its production facilities in Spain and Malaysia.

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