Discord in the AMAT SunFab Group

Sources cite management threats of off-shoring amidst low morale.

Eric Wesoff April 09, 2010

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

We received a communication from someone claiming to be an Applied Materials employee who attended a group meeting this week called by AMAT CEO Mike Splinter to discuss the future of Applied's SunFab amorphous silicon group. Mark LaPedus of EETimes spoke with the source at Applied Materials. We are still in the process of confirming the source's veracity, but LaPedus tells us he's pretty sure it's an Applied employee and he covers Applied closely.

According to the source:

"Mr. Splinter called a group meeting to discuss the future of the solar group. He stated that, 'We have already given you $500 million dollars to develop this technology, now we will not give you anymore unless you give AMAT something. That something is 10% efficiency.'"

The source continued, "Now we are AMAT employees and we are at 9.1% right now. As usual, Mr. Splinter is finding a reason to rid himself of his U.S. employees. He stated that perhaps in the future the SunFab model will work if it is done in China or India," and, "He also gave us a deadline of the end of July before he cuts off all funding. He said we control our own destiny, and he will not help us any longer."

We've been watching the situation at AMAT for months and have reported on it here and here. We covered this less-than-positive announcement by SunFab customer Signet and the SunFilm bankruptcy, as well.

According to LaPedus, Applied did not deny that the meeting took place on Tuesday.

At a recent analysts event, Splinter said that "SunFab must stand on its own feet and become profitable" and that "Applied is not afraid to drop an unprofitable product."

The company issued a statement about the meeting and the fate of SunFab:

"Applied Materials remains committed to the SunFab product and the thin-film silicon PV roadmap. Utility-scale solar can be a major force in the renewable energy revolution and SunFab offers the industry's best option for cost-effective, large-scale solar PV. Several customers are gaining traction following the economic downturn and a number of banks are providing financing for large-scale projects using SunFab panels. Nine lines are signed off on and customers have 70MW of projects in the ground and more than 400MW are in construction or the planning pipeline for the second half of 2010 and 2011."

''Given where we are in the overall product lifecycle we are now able to reduce the spending run-rate for SunFab. When we started the program we had to design the equipment and the infrastructure for an entire factory line to handle Gen 8.5 (5.7m2) glass. The majority of the infrastructure development work, and related investment, is now behind us. Going forward our investment can focus on improving panel efficiencies and lowering production costs -- taking full advantage of Applied's core expertise.''

If you want to get a taste for the bad mood of at least some of the employees at AMAT, take a look at this blog.

In the commodity world of solar, price per watt is the key driver of the product and a sub-ten percent efficiency makes the price per watt target that much harder to meet. Perhaps the AMAT team can get to 10 percent -- and keep their jobs in the U.S.