Applied Materials Sees Contract Shrink From $1.9B to $250M

Applied Materials said one of its customers has reduced its contract from about $1.9 billion to $250 million in light of the global economic meltdown.

Santa Clara, Calif.-based Applied, which develops and makes factory equipment for producing solar panels, didn’t name the customer in its filing with the U.S. Securities and Exchange Commission on Monday.

Applied said the original contract, announced in March 2008, involved selling equipment for making thin-film solar panels, which use a layer of amorphous silicon and another layer of microcrystalline silicon for converting sunlight into electricity.

The announcement provides more evidence that the financial market crisis has hit the solar industry hard -- perhaps harder than many have anticipated. There has been no shortage of layoffs and business-restructuring announcements from private and public solar companies. BP Solar recently said it would be shuttering some of its manufacturing operations and laying off 620 employees.

Applied’s executives had previously warned of a slower market demand for 2009. Back in February, the company’s CEO Mike Splinter said he wasn’t expecting to sign new contracts for a few quarters.

"We are planning for a prolonged period of weakness. We are still in the early days of this crisis. There is much we will still learn over the next year," said Splinter over a conference call with financial analysts to discuss the company's quarterly earnings.