Applied Materials poised for record PV equipment revenues in 2011

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

In reporting their first quarter FY’11 earnings on 24 February 2011, Applied Materials (AMAT) announced new quarterly orders within their Energy & Environmental Services (EES) segment (which is dominated now by c-Si PV-specific tooling) of US$668 million, comprised of new quarterly bookings records for each of the key product lines served by AMAT in c-Si manufacturing today: c-Si cell back-end solutions and wafer wire-saws.

The good news didn’t stop there. EES revenues reached US$476 million and the c-Si specific PV backlog is now estimated by Solarbuzz to be north of US$850 million. With c-Si equipment lead-times for AMAT tools in the 4-6 month range, this suggests continued strong PV revenues for AMAT through 1H’11. Finally, the operating profit for the EES segment – characterized as loss making during the thin-film Sunfab phase until just a few quarters back – posted a record of US$144 million.

Following recent commentary featured in PV-Tech on 18 November 2010 – when AMAT become the first PV equipment supplier to trend at the US$1 billion revenue level for PV-specific tools – additional milestones are now emerging.

AMAT’s PV-specific equipment revenues for calendar-year 2010 are estimated by Solarbuzz to be in the range US$1.49-1.50 billion, comfortably 50% greater than any other equipment manufacturer serving the PV industry today. And with run-rates now trending at ttm levels in excess of US$1.75 billion, 2011 PV-specific revenues (including recognition of the outstanding Sunfab tool) are on track to approach the US$2 billion mark.

There are several reasons contributing to AMAT’s most recent success, aside simply from their strategic focus on the c-Si segment early in 2010 when they discontinued new sales of turn-key thin-film Sunfab tools. Factors include: strong brand recognition of key process tools preferred by leading tier 1 c-Si manufacturers in China and Taiwan; successful (internal) ramp-up of tool manufacturing to meet strong industry capacity expansions; and short timelines between equipment-booking and revenue-recognition.

Revenue recognition policies need to be taken into account when predicting short term performance. Serving tier 1 c-Si manufacturers with qualified key process tools on a 4-6 month lead time provides high visibility on revenues which are going to be recognized just two quarters out. Interestingly, it also means that AMAT’s c-Si PV book-to-bill ratio is currently one of the most accurate barometers within the industry to assess the precise phasing of tier 1 capacity expansion sign-offs and equipment delivery dates.

At first glance, assigning book-to-bill methodology to individual key process tool suppliers may seem somewhat intuitive but – in reality – equipment supply historically to the PV industry has been far less prescriptive in nature. To explain this, comparison is drawn to equipment spending by PV manufacturers who currently fall outside of AMAT’s well-defined c-Si TAM customer grouping, thereby highlighting some of the problems facing other tool suppliers today.

Further upstream, suppliers of equipment to polysilicon producers can be confronted by 18 month order-to-revenue timelines with plant build-out often serving as the gating factor. Within the midstream c-Si segment also, turn-key c-Si lines can easily be subjected to shipment delays, prolonged tool sign-offs and even order cancellations, characteristic of increased risk assigned to new entrants (start-ups) who typically fuel this segment of the equipment spending market.

All across the thin-film sector, a host of different factors may contribute to unpredictable timelines associated with equipment orders being placed, shipped and signed off. For example, turn-key a-Si/uc-Si fabs have been known to suffer from a combination of the above two (revenue push-out) landmines; issues currently hampering the new guard of would-be Asian turn-key suppliers seeking to plug the gap occupied by the likes of AMAT until recently. And within the CIGS segment specifically, PV equipment suppliers can remain in a state of prolonged limbo, awaiting funding outcomes from a subset of CIGS manufacturers whose production process flows render them as potential customers.

The remaining factor behind AMAT’s PV revenue success lately is market-share gain. Quite simply, the more capacity expansions are dominated by aggressive (and vertical-integration aspired) tier 1 c-Si players in China and Taiwan, the greater AMAT’s market share within their overall c-Si TAM.

There is little doubt that the myriad of new (lower tier China-based) entrants tooling up along the c-Si manufacturing value-chain has created a viable (but potentially short-term) business model for equipment suppliers who are not part of the tier 1 producers’ expansion plans. However, quarterly c-Si equipment spending levels are becoming increasingly weighted towards repeat OEM volume purchasing of key process tools.

The one – not insignificant – dark cloud on the horizon (for AMAT and the industry as a whole) relates to the ongoing debate surrounding fab overcapacity. However, it should be noted that – while strongly correlated – overcapacity is somewhat different to oversupply. Over the short term, capacity drives equipment spending first and foremost, irrespective of fab productivity. (Review a-Si/uc-Si and CIGS equipment spending through 2011 as a case-study to verify this.) Oversupply is related to capacity conversion rates (or utilization) of fabs along the value-chain and their relative demand downstream.

Equipment spending levels could indeed remain robust in the short term. It only takes a handful of tier 1 c-Si producers in China to commit to multi-year projects to reach full vertical integration at the several-GW level which – coupled with the further elimination of legacy cost-constrained c-Si producers in Europe – can provide ongoing revenue opportunities for leading PV process tool suppliers.

On the flip side however, a significant downturn in PV market demand through 2H’11 may dominate proceedings in a more abrupt manner, both pushing out new capacity expansion sign-offs to 2012 and signalling the start of a downturn in the equipment spending cycle. The attached figure – adapted from analysis contained within the forthcoming April 2011 Solarbuzz PV Equipment Quarterly report – highlights the projected equipment spending trends from tier 1 c-Si cell manufacturers in China and Taiwan for 2011. The fall off in spending during 2H’11 reflects a softening in demand for 2012.

The outlook in 2011 for leading c-Si tool suppliers therefore shows high visibility during the first two quarters (based on backlogs), followed by a back-half of increased uncertainty as the year unfolds. Attention to book-to-bill trends over the next few months will provide key indicators here and in this respect, AMAT’s next reporting during May 2011 should offer strong signals to the PV industry as a whole as it forecasts tier 1 capacity trends for 2012.

6 July 2021
Explore in depth the opportunities of the different countries via case studies, business and financial models that will foster growth in the region with particular focus on Thailand, Philippines, Indonesia, Taiwan, Korea, Cambodia, Singapore, Malaysia & Vietnam.
13 July 2021
Energy Next is a new industry exhibition focusing on the latest renewable energy and energy efficiency technology, which will be held for the first time in 2021 in Sydney, Australia alongside the Clean Energy Council’s Australian Clean Energy Summit, the peak gathering of leaders driving Australia's energy transformation. Organised by the same people behind Australia’s largest clean energy event, All-Energy Australia, Energy Next will give visitors two days of access to key suppliers in the industry, free-to-attend professional development and industry workshops, and networking opportunities to better understand clean energy issues and solutions and learn about the latest developments in this transformational, dynamic sector.
24 August 2021
Join us to hear directly from the CTOs and heads-of-research from the top-20 cell/wafer producers to the PV industry today. You'll find out which companies are investing and what technologies and cell architectures are being primed for multi-GW production and gather key market intel around wafer supplier trends for cell manufacturing, including which format/wafer-size is likely to dominate 3-5 years out.
25 August 2021
The Intersolar Summit Brasil Nordeste takes place in Fortaleza, Brazil. It addresses leading local and international experts on solar power and renewable energy in the region. The Summit’s mission is to provide in-depth education, enable high-quality networking opportunities, expand the use of PV technologies at regional and national level and strengthen the local PV industry. The Intersolar Summit Brasil Nordeste is organized by Intersolar South America - Latin America’s largest exhibition and conference for the solar industry: Solar Promotion International GmbH, Pforzheim, Freiburg Management and Marketing International GmbH (FMMI) and Aranda Eventos & Congressos Ltda, São Paulo as co-organizer.
6 September 2021
The 38th European Photovoltaic Solar Energy Conference and Exhibition will be held online from 6 - 10 September 2021, allowing PV experts from all around the globe to participate with just one click! The EU PVSEC is the world's leading forum for PV Research and Development and the biggest Conference on PV Solar Energy worldwide. That is why PV experts from all around the globe are keen on gathering together each year to be part of this specialist’s event, to present and discuss the latest developments in Photovoltaics, to network and to conduct business.
7 September 2021
Intersolar Mexico sits at the cross-section of photovoltaics, solar heating & cooling technologies, and energy storage. The event serves as the industry’s go-to source for invaluable technology trends and premier B2B contacts in the promising Mexican solar market. In its second edition from September 7–9, 2021 Intersolar Mexico together with the co-located The GREEN Expo® and Aquatech Mexico will move to a new venue – Centro Citibanamex.

Read Next

June 18, 2021
In order to align with its net zero target, solar capacity in the UK needs to treble to 40GW by 2030, according to a new report from Solar Energy UK this week.
June 18, 2021
The Federal Energy Regulatory Commission (FERC) this week presented a draft order aimed at establishing a joint Federal-State task force on electric transmission
June 18, 2021
Horizon Power and PXiSE Energy Solutions have successfully powered the Australian town of Onslow with completely renewable energy, demonstrating the potential of microgrid technology
June 18, 2021
Spanish utility Acciona has set a price range for its planned initial public offering (IPO) of its renewables division of up to €29.76 (US$35.36), potentially valuing the business unit at as much as €9.8 billion (US$11.6 billion).
June 18, 2021
UNOPS Sustainable Investments in Infrastructure and Innovation (S3i) has signed an agreement to invest in a 250MW solar plant in Rajasthan, India
June 18, 2021
Lightsource BP has added 703MW to its Spanish pipeline through the acquisition of projects from Grupo Jorge, bringing its total pipeline in Spain to 3GW.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
July 6, 2021
Solar Media Events
August 24, 2021
Solar Media Events, Upcoming Webinars
October 6, 2021