Chinese solar startup JinkoSolar Holding said Monday that it raised $35 million in a second round of funding led by China Israel Value Capital.

JinkoSolar, based in Shangrao city, China, makes silicon wafers, which are used in the manufacturing of photovoltaic cells and panels. The startup said that because of manufacturing efficiencies it can produce more silicon wafers per unit of raw silicon material at “significant[ly] lower prices.” But the startup didn’t give any pricing details and couldn’t be reached before publication.

The solar industry is striving to produce power at prices equal to or cheaper than fossil fuels, like coal. Everyone involved in the solar industry supply chain—from raw material production to finished panel installers—is looking to reduce costs, and any startup that can help in that effort will enjoy a growing market share.

But Morningstar analyst Rick Hanna said JinkoSolar should find it hard to compete with companies like LDK Solar, based in Xinyu City China, which have already achieved scale.

LDK said it will have 1.1 gigawatts of solar wafer manufacturing capacity by the end of the year. Another competitor, Hong Kong’s GCL Silicon, plans to have 2.7 gigawatts of wafer production capacity by the end of 2011.

And each of these companies has started producing polysilicon, the raw material needed to make wafers and a major constraint in the industry.

Ami Dotan, general partner at China Israel Value Capital, said in a statement that JinkoSolar has secured long-term raw silicon material supplies and wafer sales contracts, but he did not provide any details.

Still, Hanna said that if JinkoSolar does have proprietary technology that reduces the cost of silicon wafers, the startup will find willing business partners in a growing industry. He expects the solar market will grow by 30 to 50 percent annually over the next three to five years by unit volume, as government subsidies and increased interest in renewable energy spur demand.

China Israel Value Capital, a partnership between China’s Shenzhen Capital Group and Israel’s Pitango Venture Capital, invests in Chinese companies in growth and expansion stages. The partnership seeks to introduce proven Israeli technologies into its portfolio companies.