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The
silicon wafer business has come a very long way from a legacy of
quarter after losing quarter back in the day, and the
crystalline-silicon solar boom has played no small part in the sector's
transformation.
Case in point: MEMC Electronic Materials. The company
shared its quarterly financials last week and, to no one's surprise, it
showed another profitable period. The news came right on the heels of
the signing of two more long-term solar wafer deals, which could total
$8 billion or more over the life of the agreements---and which bring
the total for such 10-year deals in the $15 billion--$18 billion range.
The only hiccup in MEMC's relentless march was a missing week of polysilicon production, caused by a "construction accident" early last month at the company's plant in Pasadena, TX. Company CEO Nabeel Gareeb said the mishap caused the firm to miss its cost projections, delay its expansion, and take a hit in the "double-digit millions." The company's revenues for 2Q and 3Q07 were practically identical---$472.8 million vs. $472.7 million---but the polySi glitch showed up on the margins, with 3Q's hitting 50.5% of the gross, or $238.8 million, compared with 2Q's 52.2%, or $245.6 million---a little under a $7 million differential.
But it's those long-term, solar-wafer "capacity reservation deposits" that really get one's attention. The deal with Conergy, which could bring in as much as $8 billion to MEMC's coffers over the next decade (surpassing the total of the prodigious Suntech agreement announced in July), also gives the wafer company a small piece of the action of the customer's cell/module unit---yet another recent channel and twist in the silicon houses' revenue streams and business models. The other deal announced last week---with Taiwanese cell-maker Gintech Energy---is really an amendment to an existing agreement, boosting the revised total toward the $3 billion--$4 billion neighborhood.
MEMC is likely to hit annual sales in the neighhorbood of $1.8 billion to $2 billion when its fiscal year ends on the "real" New Year's Eve. When you average the high end of its long-term solar-wafer deal revenue projections---$18 billion, give or take---against the company's current intake, that's about 9 or 10 years of sales at its current pace. And that's without any additional growth, acquisitions, or additional PV silicon deals.
Sounds like a bit of champagne may be in order---both for MEMC and the wafer biz in general---when the clock strikes midnight on Dec. 31.
The only hiccup in MEMC's relentless march was a missing week of polysilicon production, caused by a "construction accident" early last month at the company's plant in Pasadena, TX. Company CEO Nabeel Gareeb said the mishap caused the firm to miss its cost projections, delay its expansion, and take a hit in the "double-digit millions." The company's revenues for 2Q and 3Q07 were practically identical---$472.8 million vs. $472.7 million---but the polySi glitch showed up on the margins, with 3Q's hitting 50.5% of the gross, or $238.8 million, compared with 2Q's 52.2%, or $245.6 million---a little under a $7 million differential.
But it's those long-term, solar-wafer "capacity reservation deposits" that really get one's attention. The deal with Conergy, which could bring in as much as $8 billion to MEMC's coffers over the next decade (surpassing the total of the prodigious Suntech agreement announced in July), also gives the wafer company a small piece of the action of the customer's cell/module unit---yet another recent channel and twist in the silicon houses' revenue streams and business models. The other deal announced last week---with Taiwanese cell-maker Gintech Energy---is really an amendment to an existing agreement, boosting the revised total toward the $3 billion--$4 billion neighborhood.
MEMC is likely to hit annual sales in the neighhorbood of $1.8 billion to $2 billion when its fiscal year ends on the "real" New Year's Eve. When you average the high end of its long-term solar-wafer deal revenue projections---$18 billion, give or take---against the company's current intake, that's about 9 or 10 years of sales at its current pace. And that's without any additional growth, acquisitions, or additional PV silicon deals.
Sounds like a bit of champagne may be in order---both for MEMC and the wafer biz in general---when the clock strikes midnight on Dec. 31.
