2010 won't be remembered as the good old days in the SunFab department at Applied Materials.

SunFilm, an Applied customer based in Germany, has filed for insolvency in the district court in Dresden. The bankruptcy will affect 300 employees who had been on reduced shifts since the end of 2009. The current market conditions and fears that the feed-in tariff will be reduced by the German government by July 1 prompted investors to stop financial support, said SunFilm.

"By filing for insolvency we are aiming for a strategic realignment of the company with a new investor. Our high-performance products, the state-of-the-art production lines in combination with an above-average market- and growth potential of our technology and the competence of our employees form a very solid basis for this," said Wolfgang Heinze, chairman of the Executive Board of SunFilm, in a prepared statement. "We regret the current development and want to express our thanks for the support we have received so far. We will use all our efforts to lead the company into a successful future."

SunFilm was one of Applied's earliest customers. It adopted SunFab -- the factory-in-a-box for amorphous silicon from Applied -- in 2007, a year after Applied got into the solar market.

Actually, you could call this a problem for two customers. Last year, SunFilm bought Sontor, an Applied customer focusing on higher efficiency tandem-junction amorphous solar panels.

Two weeks ago we reported on rumors and speculation that Applied Materials might look to scale back or even sell its group that makes equipment for amorphous silicon solar panels. Applied declined to comment on the rumors and emphasized that the company will invest more into the amorphous market.

Despite Applied's protestations, we suggested that SunFab has a cost structure inferior to c-Si, CdTe or even CIGS, for that matter.  We suggested that a reasonable business case could be made for AMAT to abandon the a-Si SunFab business entirely. The general manager and other execs in the department had recently left.

"Few a-Si manufacturers are currently in a position to compete with the incumbent [c-Si] heavyweights," wrote GTM Research analyst Shyam Mehta, who estimated that SunFab equipment can cost up to 30 percent more than standard equipment.

By contrast, Applied's crystalline silicon business is growing, Applied says.

Analysts at Goldman Sachs attributed a rise in Applied's stock to rumors that the company might actually scale back on SunFab.

"We believe that solar will be a key area of focus, with investors looking for management to be more open minded about its strategy in thin-film given the business's continued operating losses. We note that there has been some speculation in the press (Greentech Media) several weeks ago about Applied exiting the solar business, which we believe has been one of the drivers behind the recent upward move in the stock (shares are up +8% in two weeks). In our view, with the shares already up 8% heading into the analyst meeting, it will be difficult for the stock to outperform coming out of the event unless management is willing to express some open mindedness about exiting the thin-film solar business," Goldman wrote.

Then, at its analyst meeting on March 30, Applied said it would reduce investment in SunFab, according to EETimes.


''Applied finally admitted that its thin film business lacks competitiveness, and is reducing spending in this area. Clearly, this is a positive step," said Edwin Mok, analyst with Needham & Co.

 

 

 

 

 

Tags: amorphous, applied materials, goldman sachs, signet solar, sonor, sunfab, sunfilm