Reaching for the sun: Applied Materials' solar play
By Ann Steffora Mutschler, Senior Editor -- EDN, March 13, 2007
Looking forward to revenues of $500 million by 2011 from solar panel applications alone, semiconductor and thin film capital equipment supplier Applied Materials Inc. is optimistic about the market opportunities in alternative energy.
Over the past year, the Santa Clara, CA-based market leader has made a number of moves to stake its place in this emerging market that is gathering steam daily it seems, with new partnerships, investments and technology being announced at increasing frequency.
Applied's decision to enter the market came after thorough examination of the potential opportunity, explains president and CEO Mike Splinter.
During business development activities, Applied examined a number of new markets with specific constraints. "We wanted it to be able to be big enough, to utilize our core competencies and also that the market had a characteristic that if the price of our customer's product went down, it helped the market to grow – that it had that kind of positive feedback loop," he says.
Upon close examination, all of those factors played to the strength of Applied and as the company sorted things out, it was identified as a very positive industry for the company to enter – and solar is just a piece of it, Splinter says.
"We think the whole energy field is very positive as well in that semiconductors can help reduce the usage of energy – maybe semiconductor or thin film technology can help reduce the cost of energy over a period of time. But solar right now is one that we think we can have an immediate and very positive impact on what's happening in this industry," he offers.
"My view is that this is right time, it's the right technology and we're the right company to have an impact in this area to drive down the costs to help make the market grow," Splinter continues.
Thanks to the company's thin film expertise, it has been able to quickly enter the market for solar panels with its display platform.
"We're able to process something on the order of 120 square meters per hour of thin film solar cells – that's really significant. If we are able to move the efficiency up that you basically get 100 watts per square meter – we are really starting, on an hourly basis, in factories that would utilize our equipment, produce huge amounts of electricity," he explains.
On a larger scale, given the amount of attention solar power is receiving and the company's forerunning position, Applied stands in a good position to provide leadership and direction for other companies in the semiconductor ecosystem that wish to play a part as well.
Splinter does not take this position lightly, recognizing that Applied's role is significant. "The kind of direction we are really supplying here comes in several areas. It is easy to know that you've got to get the cost of producing a watt of solar electricity down. It's another thing to have a roadmap to do it," he says.
"That's the kind of scale that 120 square meters per hour allows. When you build it up into a large factory where you can drive the cost closer to $1 a watt of making electricity, that's critically important because it gives credibility to the fact that it can be done," he proposes.
"Applied Materials is not going to promise something that it can't do, where we don't have a clear technology roadmap to do it. In the end, the only thing that really matters in the solar area is the cost per watt. That's what's going to make the changeover happen. It has to be cost-effective; it has to give a payback. People aren't going to do this in large scale because its good for the environment – it has to be good for the environment and it has to be cost-effective," Splinter adds.
Given that over the history of the solar power industry, factories have been capable of producing 5-, 10- or 50-megawatts annually, the concept of a 100-megawatt factory is big, he notes that the incremental electricity needed in the world on a yearly basis is 10,000 gigawatts.
"On the scale of what is needed in the world, solar energy is nowhere that because the scale is way, way, way too small. We believe that if people start thinking about gigawatt-sized factories, then [solar power] starts to become significant. We are looking for partners that can think sizably, make real investments here, and drive the industry to deliver that level of efficiency and achieve that level of significance," he says.
To make that large of an impact, Applied will be a strong voice, Splinter asserts.
"We'll work with governments around the world. There are already some leadership countries – 60 percent of all the solar installations in the world are in Germany. Japan is the second leader: if you look at the top 10 solar companies, 7 are Japanese companies," he notes. "This is a worldwide phenomenon this is going to happen in China, India, and Spain. Spain is already looking at some huge solar installations and creating an industry. I think you are going to see various countries really moving in this space to help them with energy independence and with clean generation of electricity."
As far as the United States, Splinter says he is pleased with what California is doing as far as solar energy policy, but thinks the rest of the country also needs to take a serious look at what can be done to advance alternative energy.
In fact, just this month, Moser Baer India Ltd. selected Applied to develop and install what is believed to be the world’s first Generation 8.5 thin film solar module production line in New Delhi, India.
This Gen 8.5 line will manufacture photovoltaic solar modules using ultra-large 5.7-square meter substrates, measuring 2.2 meters by 2.6 meters. These glass panels – four times bigger than today's largest solar panel substrates – are expected to drive down panel production costs and help reduce the overall cost of solar electricity, Applied concluded.
This is part one of a three-part series on the solar power industry. Stay tuned for part two on, "The science of solar" in the April 10 edition of EB Weekly.
