Applied Materials sees strong earnings, posts record c-Si PV bookings, but SunFab unit takes big hit

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

Applied Materials reported much improved overall financial results for its second quarter ended May 2, but a weak showing by the company’s energy and environmental solutions group detracted from an otherwise solid performance.  Led by strong silicon systems and display group revenues, the company reported overall net sales of $2.3 billion and net income of $264 million, with new orders of $1.26 billion—all well above the previous quarter’s numbers.

But the EES group (which includes solar) saw a 48% drop in sales and registered an operating loss of $145 million, largely due to the ongoing weakness of the SunFab thin-film PV product line, which accounted for an inventory charge of $83 million and contributed to the lowering of the company’s overall gross profit margin of 3.6%.

Negative backlog adjustments of $184 million came primarily from EES, with thin film making up the majority of that portion due to cancellations. 

The EES group’s orders did increase 64%, almost exclusively because of strong demand for Applied Materials’ wafering and metallization equipment for crystalline-silicon solar cell manufacturing, mainly from Chinese customers.

Company officials said during the conference call that it was the highest-ever quarter for c-Si bookings, and they expect 25% growth in sales. Some 1GW in nameplate capacity of Esatto tools had shipped during the period, with another 50% increase in production run-rate seen for that c-Si product line over the course of the year, according to Mike Splinter, Applied’s chairman/CEO.

Despite the bullish outlook, he cautioned that “while demand signals for crystalline-silicon equipment remain strong in the near term, we’re closely watching the longer-term capital spending outlook, given the growing potential for overcapacity, the change in the value of the Euro, and uncertainty about future European incentives.”

However, the ongoing woes of the SunFab thin-film equipment have forced Applied to move toward restructuring the unit, taking what Splinter called “decisive steps to realign the business with a lower market outlook,” Splinter said.

“The second quarter [for thin film] was very difficult in all respects,” he explained in a prepared statement during the call. “A large customer filed for insolvency, a major new customer failed to secure financing, and several other customers experienced weaker outlooks and reduced their spending plans. These events have significantly reduced our thin-film solar revenue expectations for the year and lowered our demand forecast for new factories.

“As a result, our thin film performance for 2010 will be well below expectations, and we now expect that EES will not meet its goal to achieve breakeven for the year on a non-GAAP basis. We have viewed breakeven as an important milestone for EES that would contribute a substantial improvement to our company’s profitability,” he continued.

“Since that goal is no longer achievable, I have asked our team to develop a plan that will accelerate reductions in our thin-film cost structure beyond the levels we discussed in our recent analyst meeting. These reductions will bring our costs in line with the lower demand profile, while allowing Applied to meet our commitment to existing customers. I expect the plan to be finalized by the middle of June, and I expect EES to make a positive contribution to our company’s financial performance in fiscal 2011.

“Going forward, we will continue to sell SunFabs, but only where we see an acceptable return on the investment. Our confidence in the long-term potential of the thin-film solar market remains high. We know that Applied has the technology and people needed to drive excellent solutions. However, we must have a business that stands on its own,” Splinter concluded.

The company head was asked during the question-and-answer segment of the conference call what kinds of projects might make ROI sense in terms of future SunFab engagements. He replied that “there are a number of different kinds of projects that make sense,” including “large projects with utility companies in China or major companies in India,” adding that Applied is “having discussions with a number of those companies.”

Splinter also said that upgrades, both capacity expansions and tandem junction-related, would “make very good sense and have excellent returns on investment for the company.”

CFO George Davis, responding to a question about any potential liability issues related to SunFab gear sitting in backlog, reiterated the company’s continuing commitment to its current thin-film PV customers.

Noting that virtually every factory acceptance has been signed off, he explained that “the revenue shortfall we’re seeing is typically coming from customers unable to pay bonus obligations that reflect performance in factories above original specifications.”

“The majority of the inventory we have today is associated with installed equipment in factories that we expect to sign off at the end of this year,” he added.


AMAT EES segment results ($M)

Q2 2010

Q1 2010

Q4 2009

Q1 2009

Percentage change, Q2 vs. Q1 2010







New orders






Income (loss)








22 September 2021
To commemorate the World Energy Storage Day(WESD) on 22 September, being recognized worldwide, Customized Energy Solutions (CES) and India Energy Storage Alliance (IESA) is organising the 5th global conference and virtual expo, which will be held virtually on 22 September 2021. WESD is a global movement initiated by various apex trade bodies working to promote and adopt energy storage, e-mobility & green hydrogen technologies for a sustainable future. The forthcoming edition of WESD is expected to attract global participation with an intent to facilitate bi-lateral trade, market development and new research and innovation, which will invite 100+ countries, 100+ regulators & policy makers, 100+ International speakers,1000+ organisations, 100+ partners & exhibitors and 20,000+ global delegates.
28 September 2021
Solar Solutions International is the largest trade show for solar energy in Northwest Europe. Now the solar market has grown up, it's time for the next step. Solar Solutions International displays more than 500 innovations and over 100 practical seminars concerning the latest in energy storage, smart products, and an ever evolving array of solar panels. As an exclusively B2B trade show, Solar Solutions International offers both exhibitors and visitors the chance to network at the highest level. Duurzaam Verwarmd, the largest trade show for sustainable HVAC technology in the Benelux, is held simultaneously. This way your one visit gets you up to date with all of the developments in both sustainable energy and heating.
6 October 2021
Intersolar Europe is the world’s leading exhibition for the solar industry. It takes place as part of The smarter E Europe – the continent’s largest platform for the energy industry. Under the motto “Connecting solar business,” manufacturers, suppliers, distributors, service providers and project planners and developers from around the world meet in Munich every year to discuss the latest developments and trends, explore innovations firsthand and meet potential new customers.
6 October 2021
The future is bright for a new era of US solar and storage, and the 8th annual Solar & Storage Finance Summit will provide opportunities to discuss solutions to the industry’s challenges and provide a networking platform designed to bring together the top minds in the industry to do business. With a mix of high-level, informative presentations and panels, a stellar cast of speakers and audience members with deal-making capacity, the 2021 edition of the event will be a sell-out success.
18 October 2021
Intersolar South America, South America’s largest exhibition and conference for the solar industry, takes place at the Expo Center Norte in São Paulo, Brazil on October 18–20, 2021, and has a focus on the areas of photovoltaics, PV production and solar thermal technologies. At the accompanying Intersolar South America Conference, renowned experts shed light on hot topics in the solar industry.
19 October 2021
This year’s EV World Congress will hold a special role, not only as the first live EverythingEV event in over a year – a chance to renew your connections and re-engage with the EV sector face to face – but also as a chance to share insight and inspiration as world starts to look towards move on post COVID towards hitting ambitious decarbonisation goals in 2030 and beyond. As ever, we will be bringing world leading organisations, cities, and technology providers to the UK to inspire EV innovators, and delve into the challenges facing the sector as the UK looks to revolutionise road transport.

Read Next

September 17, 2021
BP, Abu Dhabi National Oil Company (ADNOC) and Masdar have partnered up to develop low carbon hydrogen hubs and create decarbonised air travel corridors between the UK and UAE in a deal that will see “billions” of dollars of investment.
September 17, 2021
US utility company Dominion Energy Virginia has proposed 15 new energy projects totalling 1GW of power for the state, which Dominion Energy claimed was the largest group of projects to be submitted to the Virginia State Corporation Commission (SCC)
September 17, 2021
Renewables developer Ørsted has promoted Neil O'Donovan to CEO of its onshore business unit following the resignation of his predecessor in August.
September 17, 2021
A 58.5MW floating PV plant in Thailand, said to be the largest install of its kind in the country, has been connected to the grid, according to inverter and floating solutions supplier Sungrow.
PV Tech Premium
September 17, 2021
PV Tech spoke to investors and analysts about why Brazil is fast becoming an attractive market for solar investment.
September 16, 2021
Vistra Energy has welcomed the enactment of clean energy policies in Illinois which the power generation company said will support 300MW of solar and 150MW of battery storage to be built at nine of its coal plant sites. 

Subscribe to Newsletter

Upcoming Events

Solar Media Events
October 6, 2021
Solar Media Events
October 19, 2021
Solar Media Events
December 1, 2021