By Ucilia Wang
Oerlikon Solar (OTC:OERLF) is pulling ahead of Applied Materials (NASDAQ:AMAT) in a race to dominate the amorphous silicon thin-film solar market, wrote Weston Twigg, a senior research analyst with Pacific Crest Securities, in a research note Monday.
Both Oerlikon and Applied don’t expect to ink new sales contracts in the near future, a result of the tough market conditions. But Oerlikon has sharpened its competitive edge by lowering the initial capital costs to install and run its factory equipment, and by its recent alliance with Tokyo Electron (OTCPK:TOELF), Twigg wrote.
Oerlikon’s customers have produced about 800,000 solar panels, compared with the 100,000 panels made by Applied’s customers, Twigg wrote. Oerlikon also promises to lower the cost of making panels using its equipment to $0.70 per watt by 2012, compared with $0.80 per watt from Applied, he added.
In the last few years, Oerlikon and Applied have competed fiercely for customers in Europe, Asia and the United States. The two companies offer what’s called a “factory in a box” — a complete set of equipment for making solar cells and assembling them into panels.
Their first-generation equipment produces solar cells with a thin layer of amorphous silicon, the key ingredient in converting sunlight into electricity. Both companies also have developed a second-generation technology that adds a second layer of microcrystalline silicon to boost the cells’ power output.
Oerlikon’s partnership with Tokyo Electron also bolsters the Swiss solar company’s competitive edge, Twigg said. Tokyo Electron is becoming Oerlikon’s sales representative in Asia, where both Oerlikon and Applied has a number of customers. The relationship will intensify the already fierce competition between Tokyo Electron and Applied in the semiconductor and flat panel display markets.
Tokyo Electron is the world’s second largest semiconductor factory equipment maker, behind Santa Clara, Calif.-based Applied. Oerlikon’s parent company, Oerlikon Group, also makes factory equipment for the semiconductor industry.
Although Tokyo Electron has a joint venture with Sharp to develop factory equipment to make solar thin films, it appears that the Tokyo Electron is developing the equipment using Sharp’s (OTCPK:SHCAY) patents for Sharp’s own use, Twigg said during an interview. So the joint venture shouldn’t pose a threat to Oerlikon’s business, he added.
“Oerlikon is removing some anxiety about Tokyo Electron,” Twigg said. “By getting behind Oerikon’s technology, Tokyo Electron is bringing a lot of credibility.”