Analyst: AMAT “at a crossroads” as solar biz ramps

October 4, 2007 – Applied Materials is on track to recognize its first revenues for thin-film solar modules by the April quarter, earlier than many analysts have been expecting, and a first customer thumbs-up could set off a “domino effect” that generates a wave of solar business and a push toward end-market grid parity, according to one analyst’s report.

In a research note, Mehdi Hosseini with Friedman, Billings, Ramsey & Co. (FBR Research) claims that “recent checks” suggest AMAT’s first customer, Moser Baer, is on schedule to install 40MW worth of TF solar module manufacturing equipment by the end of this year, with shipments of another line (40MW+ and likely converted to “tandem junction”) by mid-2008. Shipment to another customer, Signet (~15MW), should also be out the door by year’s end.

Hosseini writes that once AMAT recognizes revenues from Moser Baer, that could start a “domino effect” accelerating business from more customers, providing $320M+ in sales in 2008, ~$200M more than FBR had hoped. That would not only legitimizing AMAT’s place in solar, but also help AMAT’s TF solar customers in their dual plans — be a second source to FirstSolar, but also help develop the end market (e.g. India-based utility companies) to use a “solar farm” model to achieve grid party ($1/watt) and warrant further business expansion.

“We believe the most critical milestone in AMAT’s recent history is upon us,” he writes, if AMAT can debug and production-certify that first Moser Baer TF module manufacturing line by early 2008. If that happens, and other customers come in with confidence, “we estimate at least $1.6B of TF-related revenues at AMAT by 2010,” a figure that could soar, Hosseini adds, if customers can show that AMAT’ technology will enable grid parity at a module price of $1/watt by 2010.

There’s a caveat, though. While AMAT’s clout alone has led to 7-8 contract signings for solar, “none of AMAT’s TF customers has as much experience as FirstSolar,” Hosseini writes. Also, with AMAT providing turnkey services to help with the learning curve, there’s concern about execution risk.

“But, given AMAT’s history and, particularly, its experience in flat panel manufacturing, the odds are that AMAT will be able to deliver on its promise,” he writes.


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