Back in late 2010, Eileen Tanghal, Investment Director at Applied Materials, spoke on a cleantech panel and had this to say about the solar industry, at least from Applied Materials' equipment vendor perspective: "This year will be the best year we're going to see in the next two or three" because "there is just too much capacity coming on-line." Tanghal added that AMAT acquisition Baccini "is doing extremely well, but we are being very cautious -- we don't think it's going to be sustained next year," adding that "$1.05 per watt crystalline silicon costs will happen."

Prophetic words from Tenghal. There is too much PV capacity on-line and, in fact, there are gigawatts of PV panels in inventory and in the supply chain. And as for $1.05 per watt crystalline silicon costs, well, we're well past that benchmark.

All of these conditions set up headwinds to the growth of the photovoltaic equipment market and that is borne out by the abysmal book-to-bill numbers just reported by SEMI.

SEMI has reported that the worldwide PV manufacturing equipment book-to-bill ratio fell to 0.35 in Q3, reaching its lowest level since the start of the data collection in the first quarter of 2010. 

Worldwide billings declined 24 percent from the previous quarter to $1.6 billion, according to the SEMI press release.

The release goes on to state that, "After aggressive capital equipment spending across the entire supply chain that characterized 2010 and the early part of 2011, many PV manufacturers have canceled or put on hold their capacity expansion plans, as challenging market conditions and poor visibility into market expectations continue to overshadow the industry outlook into next year. The expectation is that bookings will not significantly improve in the next six months without policy adjustments in Europe, Japan and China, combined with easing of credit markets and improved economic growth."

Applied Materials' solar group actually had a record year in 2011, but the fourth quarter was weak, and 2012 looks to be bleak for the Energy and Environmental Solutions group (which includes the solar group, amongst other things) and for the PV equipment industry as a whole.