Who’s behind AMAT’s $1.9B mystery solar sale?

Mar. 4, 2008 – In a regulatory filing today, Applied Materials indicates it has signed a $1.9B contract to supply equipment and services (e.g. installation, support) to an unnamed privately held foreign customer for “multiple solar factories”. The deal, which will feature AMAT’s Sunfab thin-film tandem junction production equipment, will collectively produce an estimated annual output ~1GW of solar PV modules.

A spokesperson confirmed the sale to the San Jose Mercury News, suggesting the deal is the company’s biggest sales agreement, “and quite possibly in the history of the solar industry.”

SST’s Editors’ Take

This deal is eye-popping when cast against AMAT’s current fledgling PV business, which posted about $260M in orders in 1Q08. For perspective/scale, it’s worth noting that the newly announced Toshiba/Sandisk fab, which could cost a mammoth ~$7B to build/tool up/ramp, could easily result in >$1B in sales to AMAT over the multiyear period as the facility ramps.

Conventionally, SEC rules have stipulated that companies must report all customers by name which comprise more than 10% of revenue. With AMAT currently at ~$8B today, the annual revenue from this deal either must be less than $800M, or the company may not want say the name for another year until the revenue is actually recognized. Also, the $1.9B likely is tied to various clauses and criteria. And the contract almost certainly involves deliveries spanning more than a year, maybe even 2-5 years, so the revenue recognition in 2008 is probably far below the actual stated pricetag.

Some headline-sleuthing unearths two possible candidates for AMAT’s mystery PV customer:

– One month ago Indian firm Moser Baer said it had committed up to $1.5B in investments for nearly 600MW worth of thin-film photovoltaic equipment from an unidentified supplier. Moser also has been an AMAT customer since March 2007. The AMAT filing, though, says its new customer is privately held, and Moser is listed on several stock exchanges.

– Local reports in India suggest major moves by Reliance Industries, committing billions of dollars to domestic PV efforts over the past year. Another report by the Times of India quoted a local AMAT exec praising the opportunity for PV cells in India, in part due to abundant sunlight and incentives like a feed-in tariff policy.

It’s also entirely possible that there’s a new player in the market, with really deep pockets and a commitment to making a splash in solar (UAE/Dubai has made recent headlines about an interest in solar activities). J.M, E.K., D.V.


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