Applied SunFab service aims to optimize solar manufacturing efficiency

The semiconductor manufacturing equipment leader has also inked a multiyear agreement with T-Solar to manage and optimize its SunFab line with engineering, logistical, technology and automation approaches in order to allow low operating costs and on-going productivity improvements.

By Ann Steffora Mutschler, Senior Editor -- Electronic News, 5/12/2008

To guarantee the performance cost and output of its SunFab thin film equipment line for producing solar modules, Santa Clara, Calif.-based semiconductor, display and solar panel manufacturing equipment giant Applied Materials Inc [AMAT] today detailed its SunFab Performance Service program that aims to allow continuous cost reduction based on megawatt output.

This integrated support solution specifically aimed at the solar industry is meant to allow customers to quickly ramp to volume production and optimize the efficiency and productivity of their SunFab line, the company noted.

In addition, Applied also said it has signed a multiyear agreement to provide the SunFab performance service to photovoltaic industrial group T-Solar Global SA of Spain for its SunFab thin film line.

Using 5.7-square-meter-sized glass panels, Applied said its SunFab Line can reduce the cost of utility-scale photovoltaic installations by more than 20%.

As part of this agreement with T-Solar, Applied said it will manage and optimize T-Solar’s SunFab line performance with a variety of engineering, logistics, technology and automation software approaches, as well as conduct preventive and corrective maintenance and complete parts management while providing continuous improvement programs and total factory optimization to allow low operating cost and on-going productivity gains.

“By entrusting the equipment, maintenance and performance of our solar production line to Applied, we are guaranteed specific results that minimize our risk, shorten our time to production, and meet our profit goals. We view this as the most economic solution to running our solar fab that over time will allow us to drop the cost per watt of solar energy,” said Cesar Alberte, T-Solar fab director, in a statement.

Further, Manfred Kerschbaum, senior VP and general manager of Applied’s global services organization said that guaranteeing performance through cost of operation and associated megawatt output represents a major shift from the traditional service model. “We are pleased to pioneer the way in providing customers like T-Solar with a comprehensive service program that represents a step function improvement in value and the most complete and dependable choice for maintaining and optimizing their investment.”

T-Solar is Applied's first European customer for SunFab, which is expected to have a nominal rated capacity of 40 megawatts per year when fully operational, to allow T-Solar to capitalize on the rapidly expanding market in Spain for photovoltaic installations.

In March of this year, Applied made a filing with the U.S. Securities and Exchange Commission to let them know it had secured a $1.9 billion deal for its SunFab equipment, but did not reveal the customer’s name. Interestingly, later that month, Sharp said it would invest $724 million in a thin film solar cell plant, but did not reveal the supplier’s name, and Applied did not comment on the matter.

Indeed, Applied’s solar moves have captured the interest of financial analysts.

C.J. Muse, semiconductor equipment and display technologies analyst at Lehman Brothers Equity Research said in a report today that initial, momentum type move in solar has occurred and the next direction will be driven by actual results – i.e. seeing orders, installation, and impact to business model.  “And here is where we have our biggest issue with Applied’s emerging thin film business – we see operating margins to come in at best 15% vs. public comments from management of ‘on par with display’s 25-30%.’ We see low pass through margins as well as competition driving the lower level margins. And to this end, we think best case scenario is approximately $4 valuation/share for solar which we believe is already priced into shares.”