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Applied banks on solar despite recession

Posted: 20 Feb 2009     Print Version  Bookmark and Share

Keywords:photovoltaic modules  semiconductor equipment business  fab-tool vendor  SunFab line 

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

The company is also banking on solar for growth this year, 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. "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 per cent 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" programmes within its operations in 2009, said George Davis, senior VP and chief financial officer of Applied, at the event.

During a presentation, Davis did not elaborate. He also said the company will look at solar and related markets—and not semiconductors—to 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 Rs.795.51 crore ($160 million) in 2007, to Rs.3,977.54 crore ($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 5.7m² thin-film silicon photovoltaic modules.

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