Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
EE Times-Asia > Manufacturing/Packaging

Applied stays positive, banks on solar

Posted: 20 Feb 2009 ?? ?Print Version ?Bookmark and Share

Keywords:fab tool market? solar power? photovoltaic cell? economic downturn?

Applied Materials Inc. has vowed to weather the economic storm and emerge from the downturn as a much stronger competitor.

The company is also banking on solar for growth in 2009, amid a major slump in its more traditional fab and LCD gear markets. "This is a bad economy," said Mike Splinter, president and CEO of Applied, at an analyst meeting in New York Feb. 18. "I would just say this is the worst downturn in the history of the semiconductor equipment industry."

Compounding the problem is that visibility is cloudy for the foreseeable future. "We don't know how long the recession will last, but we know Applied will last and emerge as a stronger leader in all of our markets when the economic environment improves," Splinter said.

"We are still investing in new products," he said. "At the same time, we are watching our balance sheet."

In other words, Applied plans to hunker down amid the downturn. The overall semiconductor equipment sector is expected to fall by a staggering 41 percent in 2009 over 2008, according to The Information Network.

The real question is what Applied will do next to respond to the current and horrific IC downturn. In recent times, the largest fab-tool vendor has announced layoffs, furloughs and other cost-cutting measures.

Are more layoffs and cutbacks in the works? Applied plans to implement more cost-cutting and "restructuring" programs within its operations in 2009, said George Davis, senior VP and chief financial officer of Applied, at the event.

Money on solar
During a presentation, Davis did not elaborate. He also said the company will look at solar and related marketsand not semiconductorsto boost its growth in 2009. Clearly, Applied is pouring more resources into its growing solar business amid a major slump in its traditional semiconductor equipment business. At the event, Splinter said the company will continue to invest in R&D and vowed to extend its leadership in the fab tool, LCD gear and solar equipment markets.

This month, VLSI Research Inc. named Applied as the largest supplier of photovoltaic cell manufacturing equipment in 2008. Applied, which entered the solar market in 2006, has seen its solar tool sales jump from zero in 2006, to $160 million in 2007, to $800 million in 2008.

But reports have surfaced that Applied is experiencing difficulties with its turnkey solar efforts, dubbed SunFab. Applied's so-called SunFab Solar Module Production Line enables customers to manufacture 5.7m? thin-film silicon photovoltaic modules.

Applied has been dogged by rumors about the performance of its SunFab equipment at its installation at India's Moser Baer Photovoltaic. An analyst, who asked not to be identified, told EE Times that there was a lot of difficulty in ramping up the Moser Baer production line last year, but that he has been told it is now up and running.

Growing market
Last month, Moser Baer said its thin film photovoltaic production line is now up and running and has received certification, indicating it has met all manufacturing, module efficiency and yield specifications. The announcement that the production line was up and running came some 10 months after Applied first announced that Moser Baer had selected the company to develop and install a thin film solar module production line in India's Greater Noida, a sub-city of Delhi.

Contacted for an interview request, a spokesperson for Moser Baer initially said the company would be willing to discuss the performance of the SunFab equipment and provide an update on its manufacturing ramp up. However, the spokesperson failed to respond to a subsequent e-mail suggesting an interview time.

Signet Solar, a Menlo Park, California-based photovoltaic module manufacturer who also has a SunFab line, declined an interview request from EE Times about its manufacturing ramp up and experience with the Applied tools. A spokesperson for the company said Signet is "insanely busy right now" and did not have time to entertain all media interview requests. The spokesperson did not respond to a subsequent e-mail asking if Signet would agree to answer questions via e-mail.

Signet announced last October that it began volume production at its manufacturing facility in Mochau, Germany, after receiving final test acceptance certification from SGS Germany GmbH, a provider of certifications, accreditations and approvals.

Executives from Applied indicated that there have been some delays or gaps in solar contracts, but they insisted that SunFab is on track.

"With more than 100,000 SunFab thin-film panels produced to date, our SunFab ramp continues at tremendous speed, with three SunFab customers in volume production today, 14 lines under construction and 8 of those lines already producing panels," said Randhir Thakur, general manager of the SunFab Thin Film Solar and Display Business Group, at the analyst meeting.

"We have already achieved important panel certifications and we have moved rapidly down the learning curve, shortening our cycle times and improving productivity," he said.

For example, Spain's T-Solar Global S.A. announced that it has begun volume production of the world's largest solar photovoltaic modules using a SunFab line from Applied. The SunFab line and modules produced by T-Solar have been awarded Intercert Certification, verifying achievement of all manufacturing, module efficiency and yield specifications.

T-Solar is expected to annually produce 700,000m? of PV panels with the potential to generate up to 45MW equivalent module production per year with the SunFab line. T-Solar plans to eventually expand the line by 40 percent and expects to gain further production efficiencies and reduced material costs.

T-Solar and Applied have also entered into a multiyear service agreement that guarantees fixed maintenance costs and is aimed at driving constant improvement in line output.

On another front, Mark Pinto, chief technology officer and general manager of the Environmental and Energy Solutions Group, said the company will also expand its standalone solar equipment business.

Fab-tool upturn
In the next 12 months, Applied will roll out seven new products in the arena, Pinto said at the analyst event. He hinted that the products would involve several areas, including automation, precision alignment and wafer cutting. The company is readying a new version of its so-called Pivot tool for the solar market.

Still to be seen, however, is when Applied's traditional fab-tool market will recover. "In past downturns, a steep recovery has occurred at the end of the cycle," said Tom St. Dennis, general manager of the silicon systems business unit. "While it is too early to focus on when the upturn will be, we are working to have the best products in place with customers who are key technology leaders."

In Q1, Applied's fab-tool business had sales of $546 million and an operating profit of $34 million. This compares to sales of $1.237 billion and a profit of $445 million in the like period a year ago. This compares to sales of $744 million and an operating profit of $177 million in the previous quarter.

As a result of the trends, Applied recently rolled out a $400 million annual cost-cutting program. Applied will most likely move to exceed that target number, thereby lowering its break-even point from $1.3 billion to $1.2 billion on a quarterly basis.

Last year, Applied said it would reduce its global work force by 12 percent after its GAAP net income for the fiscal fourth quarter fell by more than 45 percent y-on-y. Applied's Q1 sales fell off a cliff amid the current and horrific IC downturn. The fab-tool giant also did not provide an outlook for the current quarter, but it did say sales would fall by more than 30 percent in the period.

Applied reported sales of $1.33 billion in the first fiscal quarter, compared to $2.09 billion a year ago and $2.04 billion in the previous quarter.

Orders fell 59 percent in the period. GAAP net loss was $133 million, or minus $0.10 a share, compared to a profit of $262 million, or $0.19 a share, a year ago, and a profit of $231 million, or $0.17, in the previous quarter.

In a conference call, Applied said the company would cut a total of 2,000 or more jobs. This is 200 more than expected.

- Mark LaPedus, Dylan McGrath
EE Times

Article Comments - Applied stays positive, banks on sol...
*? You can enter [0] more charecters.
*Verify code:


Visit Asia Webinars to learn about the latest in technology and get practical design tips.

Back to Top