Applied Materials turnkey exit highlights control held by top tier cell makers in PV tool adoption

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This guest blog contribution is from Charles Annis, vice president of manufacturing research and Finlay Colville, senior analyst at Solarbuzz, which provides further insight into the news that Applied Materials is exiting the turnkey thin-film business and refocusing its PV technology efforts.

It seemed like the perfect fit. Applied Materials had more experience depositing high quality silicon thin films on large glass substrates than any other company in the world. For the production of TFT LCDs, the company makes the highest performance, highest productivity PECVD tools available; it has maintained a market share of around 80% for almost the entire history of the TFT LCD industry.

So in 2006, as the silicon shortage was becoming acute, solar cell supply was growing tight, top tier solar cell manufacturers were consistently returning 20% net margins and scrambling to add capacity as fast as possible, Applied Materials offered what seemed like a perfect solution. For new companies trying to jump into solar cell manufacturing, the ‘SunFab’ turn-key thin-film Si (TF Si) line seemed to provide answers to all of their needs. The technology wasn’t tied to volatile Si prices. It produced the biggest solar modules in the world; promising economies of scale for the large utility market. And it included a guarantee from one of the most reliable high tech capital equipment companies in the world.

But, on July 21, 2010 almost four years after it announced its “Going Solar” strategy, Applied Materials announced it “will discontinue sales to new customers of its SunFab fully-integrated lines for manufacturing thin-film solar panels”.

At this point the news is not much of a surprise. Clearly the company has struggled to sign up new customers since the later part of 2008 and there has been plenty of recent media speculation that an exit strategy was in the works.

Mike Splinter, chairman and CEO of Applied Materials explained, “The thin-film market has been negatively impacted by several factors, including delays in utility-scale solar adoption, solar panel manufacturers’ challenges in obtaining affordable capital, changes and uncertainty in government renewable energy policies, and competitive pressure from crystalline silicon technologies.”

Certainly, the rapid drop in c-Si module prices in the past two years significantly eroded the competitiveness of TF Si, but there probably were other contributing factors too.

• Regardless of module costs, the competitiveness of TF Si at less than 10% conversion efficiency is severely compromised by high balance of systems (BOS) costs. And although some customers were using a tandem junction process, module efficiencies were probably 8.5% at best. Movement up the efficiency curve was too slow to keep up with rapidly changing end market dynamics.

• A window of opportunity existed in 2007 and the first half of 2008. Early SunFab users Sunfilm, Moser Baer and T-Solar all had machines installed in 2007. Typically, AMAT LCD CVD users are able to start up a new fab in four to seven months, but according to the Solarbuzz quarterly PV equipment report, the fastest SunFab early adopter install to being mass production ready was 17 months. And by that time, it was already into the second half of 2008. If the product had been more mature when sales began, there may have been room to both start generating cash flow and work costs down.

• The most successful solar cell makers develop their technology in conjunction with their product portfolio and target markets. They work with equipment makers to help them fulfill their roadmap. That is one way they can differentiate their business. Most of the SunFab customers were not top tier solar cell manufacturers. AMAT was driving the roadmap on technology and customers were left with little flexibility in their business strategy as the market has shifted.

Are these issues an indictment for the rest of TF Si? The continuous price declines in c-Si modules are surely a challenge for all TF Si producers. But we still believe some producers have viable high-efficiency multi-junction TF Si roadmaps that may keep them competitive. Oerlikon Solar continues to present impressive US$0.70/W costs for turnkey lines that will ship by the end of 2010. And all TF Si companies continue to emphasize the potential for higher energy output in hot operating and low light environments; potentially making the technology more productive than c-Si in some applications.

Applied is exiting the turnkey business, but still has strong ambitions to make its environmental solutions division, including solar, a pillar of its future growth strategy. The company will continue to offer its c-Si equipment as well as individual thin-film tools and support existing customers.

The top 20 solar cell manufacturers don’t typically buy off the shelf turnkey solutions anyway and we see a growing trend for all makers to pick and choose individual tools for their specific needs. Although the scale may be smaller compared to big turnkey orders, AMAT is expected to do just fine selling individual PV process tools, like its industry leading Baccini screen-printers which are seeing renewed market demand within emerging c-Si high-efficiency and selective emitter concepts for back-end metallization pattern alignment. 

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