In releasing their FY Q1’11 financial results, Amtech Systems CEO J.S. Whang captured succinctly the underlying bullishness prevailing today at the Tempe, AZ-based PV equipment manufacturer:
“The strong order momentum we continue to generate for our solar diffusion systems reflects our continued success in expanding with existing customers and attracting new top-tier customers," the CEO said. "We continue to see a healthy business pipeline, ending the quarter with record orders and backlog.”
Indeed, Amtech Systems – and its wholly owned subsidiary Tempress Systems – have much cause for cheer.
During the second half of 2010, Amtech’s ability to recognize revenues for process tools used in c-Si cell diffusion has propelled them to the number-one position (based on trended quarterly tool revenues recognized). For the calendar year 2010, analysis contained within Solarbuzz’s PV Equipment Quarterly puts the market for diffusion furnaces for c-Si cell lines in excess of US$420M. Furthermore, several quarters of strong tool bookings during 2010 has resulted in a diffusion furnace-specific backlog at Dec. 31 estimated by Solarbuzz to be in excess of US$150M.
Representing approximately 40% of c-Si cell diffusion furnace revenues on offer to all tool suppliers across the first nine months of 2011, this suggests that Amtech’s status as revenue market-leader for diffusion furnaces should remain in place through the first half of 2011 and possibly beyond.
Understanding Amtech’s diffusion furnace revenue growth trajectory, since their focus on the PV industry during 2006, provides good insight into the changing landscape of c-Si cell manufacturing, including how each inflexion point in manufacturing trends and cell technologies has had a profound impact on the success (and often failure) of equipment manufacturers and their ability to capitalize on subsequent capital-intensive c-Si equipment spending cycles.
The first ‘phase’ of strong c-Si cell expansion during 2000-2005 by Japanese c-Si manufacturers (Sharp, Sanyo, Mitsubishi, Kyocera) provided lucrative equipment returns mainly for local tool builders in Japan. The following European c-Si cell growth through to 2009 then benefited mostly the burgeoning European PV equipment supply chain (Centrotherm, Roth & Rau, Rena, Schmid, Stangl, Baccini). But the market for c-Si equipment suppliers was opened up during the recent (emphatic) c-Si cell manufacturing transition to China and Taiwan.
The vertical-integration aspirations of Chinese c-Si manufacturers – many expanding into the midstream segment having been leading wafer or module suppliers - has ultimately provided the market pull which has contributed strongly to the success of Amtech. Unlike previous capacity expansions in Japan and Germany, c-Si cell manufacturers in China and Taiwan are compelled to forge strategic equipment supplier arrangements beyond their geographic boundaries. This has provided a more level playing field for tool suppliers worldwide, and companies such as Applied Materials, BTU International, Despatch Industries, GT Solar International, and Amtech Systems are among the leading beneficiaries of ongoing c-Si capacity expansions in Asia.
The other key contribution to Amtech’s diffusion furnace revenue growth has been its widely-publicized role as preferred diffusion furnace tool supplier to Yingli, including the high-efficiency n-type Panda cells. Since the Panda process flow is somewhat diffusion-intensive, this provides greater prorated revenues for diffusion furnaces at Yingli compared to the c-Si cell types employed by other top-tier producers.
In fact, collectively, two of Amtech’s top customers in China alone announced during 2010 capacity expansions for 2011 which call for equipment spending in the range US$50M on c-Si cell diffusion furnaces alone.
Much of the c-Si cell capacity expansions financed by tier 1 cell makers in China is part of a calculated, longer-term vertical integration strategy through 2012 and beyond. However, the precise size (and quarterly phasing) of the SAM for diffusion furnace equipment during 2011 remains subject to certain risk factors.
First, the current tightness in upstream polysilicon supply may prove to be a catalyst which causes planned midstream c-Si cell capacity expansions for Q1 and Q2’11 to be pushed out (impacting on existing backlogs). Then, moving further into 2H’11, it may be (excessive) midstream overcapacity which pushes out subsequent cycles of capacity expansion anywhere from 6 to 18 months (impacting on new bookings).
Beyond 2011, a further wildcard lurks on the horizon. Amid marketing campaigns historically based on the subtleties of horizontal or vertical, batch or inline diffusion, a bigger issue could be competitive positioning against the possible technology threat from ion implanters.
Will ion implantation gain traction in the PV industry? What impact will this have on diffusion furnace equipment suppliers?
Is the push to adopt ion implanters coming from equipment suppliers, or from c-Si manufacturers whose modus operandi has historically been to drive c-Si cell capex below $0.2/W using established and low-risk tool types?
All pertinent questions and worthy of separate commentary, but at least for now, ion implanters are unlikely to have any noticeable impact on Amtech’s quarterly revenues through the remainder of 2011.