GT Advanced Technologies: Is About To Enjoy Some Apple Solar Pie

Feb.28.14 | About: GT Advanced (GTATQ)

GT Advanced Technologies (GTAT) announced their earnings report on Monday, but they also announced that they would be hosting a New Product Technology Briefing on Friday, March 14, that will focus exclusively on these key initiatives to grow their equipment business.

GT's management, during their discussion on the solar marketplace, mentioned that they have "deployed a new technology that we expect will significantly impact the economics of producing solar cells and modules". Furthermore, the technology focused on "advancing the state of the art and design assembly of solar cells and modules." This new technology sounds pretty sweet! My first thought was this will revolutionize the solar market, increase GT's equipment sales and disrupt other solar equipment makers' short and long-term plans. I am certain this technology will drive up sales, but I will defer to Tom Gutierrez and the rest of his brilliant leadership team to speak to the market advantages of this new technology and when they expect the related orders to come flying in. The full comment from GT management on their new solar technology is below:

While solar is not expected to contribute meaningfully to revenues over the next year, it remains an important part of our portfolio. However, we continue to believe that for the solar industry to fully reach its potential, cost must come down dramatically. To this end, we have a deployed a new technology that we expect will significantly impact the economics of producing solar cells and modules. This technology was developed and comes out of a research operation we established in the Bay Area over a year ago to focus on advancing the state of the art and the design and assembly of solar cells and modules. We look forward to talking with you about this development on our March '14 webcast.

I can't speak to the specific selling advantages of GT's latest solar cell developments, but I am good at sharing information and connecting the dots so everyone can enjoy! I thoroughly enjoy playing Sherlock Holmes and trying to crack the case using only public information at my fingertips. Over the past month or so, I've been very busy researching GT and their relationship with Apple (NASDAQ:AAPL). I brought to light import/export records evidencing furnace deliveries to Apple's sapphire plant located in Mesa, AZ, and followed that up a week later by providing documentation of a correspondence between the U.S. Foreign Trade Zone officials and Apple's Deputy Director of Global Trade Compliance.

I was thrilled to find out Monday that GT would be holding a webcast to talk about their solar cell and module developments mentioned above, as well as all of their new products. I also figured everyone would like a preview of GT's solar cell and module developments that will be discussed on March 14th a few weeks early. It would be unfair of me as the Obscure Analyst to stay quiet after uncovering some great information that others would enjoy learning.

Hyperion Technology

It was clear from the various investment reports that have been issued and by listening to the silly questions asked by the analysts during GT's Q4 2013 call, that most of the Wall Street analysts have never heard of Hyperion and have absolutely no clue what this revolutionary, one-of-a-kind technology can do. GT Advanced Technologies acquired Twin Creeks Technology late in 2012, and one of their first primary focuses was to "to pursue the development of thin sapphire laminates for use in applications such as cover and touch screen devices". The Hyperion ion implanter machine acquired from Twin Creeks can cut ultra-thin wafers (25 microns thick) out of silicon, silicon carbide, sapphire, germanium and now, solar cells. How thick is 25 microns? The laser-sliced sapphire home buttons on the iPhone 5s measure 170 microns thick, which is nearly 7 times the thickness of the sapphire laminates that can be sliced by GT's Hyperion. The Hyperion machine takes a thick block of crystalline sapphire, blasts it with hydrogen ions and exfoliates a 20 micron layer-thick of sapphire from the block. The process is repeated over and over until the block is completely separated. During the Q3 2013 conference call, GT gave the following update on their Hyperion technology:

We expect our pace of development with Hyperion to accelerate, as we now have our preproduction generation tool in operation. This tool is protected by over 50 issued and pending equipment and process patents, and we believe this tool is the first-of-its-kind in the world. We continue to target market availability of Hyperion in the 2015 time frame. We continue to believe that once mature, Hyperion could rival the size of our PV business in its peak.

I figured they were just working out the kinks of the Hyperion tool before putting it into production. I had no idea that in November, just 3 months ago, that GT had been performing incredible and transformational testing on their Hyperion technology. GT's Hyperion tool will allow them to create super-thin solar cells that can be used in various PV applications. The fact that Hyperion can produce super-thin solar cells is pretty sweet, but it gets even better. What if I told you they not only can make the solar cells extremely thin, but could improve the overall efficiency rating as well? I know what you are thinking: the solar cells must cost more because of all the effort required to make the solar cells thinner and more efficient. The answer is, false. Hyperion's patented technology fires a hydrogen ion that exfoliates a solar cell and results in numerous super-thin film solar cells. The cost reductions are realized, because traditional cutting methods, referred to as "kerfing" or saw cutting, result in significant waste. Hyperion's unique exfoliating process results in very little waste and significantly more units of material compared to traditional cutting methods.

Hyperion is going to be a "disruptive technology" and a "game changer" that can and will be applied across all of GT's platforms in the foreseeable future and for the foreseeable future. During the March 14, 2014 webcast, GT management will most certainly focus some of their attention on the design and assembly of solar cells and modules. I've done my best to translate the patents so everyone can understand the key takeaways. I'm sure the sci-fi team at GT Advanced Technologies will give a more in-depth technical explanation, but I nevertheless gave it my best shot! I would love to hear from GT's CEO as to whether or not they have produced the thinnest solar cell in the industry that is ready for commercial use. Listed below are the thin-film solar cell patent links in addition to the technical background related to each patent.

EPITAXIAL GROWTH ON THIN LAMINA

BACKGROUND OF THE INVENTION

[0001] Sivaram et al., U.S. patent application Ser. No. 12/026,530, "Method to Form a Photovoltaic Cell Comprising a Thin Lamina," filed Feb. 5, 2008, owned by the assignee of the present invention and hereby incorporated by reference, describes fabrication of a photovoltaic cell comprising a thin semiconductor lamina formed of non-deposited semiconductor material. Using the methods of Sivaram et al., photovoltaic cells, rather than being formed from sliced wafers, are formed of thin semiconductor laminae without wasting silicon through kerf loss or by fabrication of an unnecessarily thick cell, thus reducing cost. The same donor wafer can be reused to form multiple laminae, further reducing cost, and may be resold after exfoliation of multiple laminae for some other use.

BONDING OF THIN LAMINA

BACKGROUND

[0002] Sivaram et al., U.S. patent application Ser. No. 12/026,530, "Method to Form a Photovoltaic Cell Comprising a Thin Lamina," filed Feb. 5, 2008, and issued as U.S. Pat. No. 8,481,845, owned by the assignee of the present disclosure and hereby incorporated by reference, describes fabrication of a photovoltaic cell comprising a thin semiconductor lamina formed of non-deposited semiconductor material. Using the methods of Sivaram et al., and others, photovoltaic cells and other electronic devices, rather than being formed from sliced wafers, are formed of thin semiconductor laminae without wasting silicon through kerf loss or by fabrication of an unnecessarily thick cell, thus reducing cost. The same donor wafer can be reused to form multiple laminae, further reducing cost, and may be resold after exfoliation of multiple laminae for some other use. Methods are needed for handling thin lamina in order to process them into electronic devices.

Two additional patents related to the thin-film solar cell process are below along with their respective abstract summaries.

Photovoltaic Cell Comprising A Thin Lamina Having A Rear Junction And Method Of Making

Fabrication of a photovoltaic cell comprising a thin semiconductor lamina may require additional processing after the semiconductor lamina is bonded to a receiver. To minimize high-temperature steps after bonding, the p−n junction is formed at the back of the cell, at the bonded surface. In some embodiments, the front surface of the semiconductor lamina is not doped or is locally doped using low-temperature methods. The base resistivity of the photovoltaic cell may be reduced, allowing a front surface field to be reduced or omitted.

ASYMMETRIC SURFACE TEXTURING FOR USE IN A PHOTOVOLTAIC CELL AND METHOD OF MAKING

A novel surface texturing provides improved light-trapping characteristics for photovoltaic cells. The surface is asymmetric and includes shallow slopes at between about 5 and about 30 degrees from horizontal as well as steeper slopes at about 70 degrees or more from horizontal. It is advantageously used as either the front or back surface of a thin semiconductor lamina, for example between about 1 and about 20 microns thick, which comprises at least the base or emitter of a photovoltaic cell. In embodiments of the present invention, the shallow slopes are formed using imprint photolithography.

Apple's Solar-Powered iPhone 6 and iPod Touch

Nearly a month ago, I wrote my first Seeking Alpha article titled: Apple's Solar Powered iPhone 6 And iPod Touch Under A Sapphire. I provided a fact checklist of why I thought Apple would feature solar-powered iPhone 6 and iPod Touch, but I was missing one key fact, the thin-film solar cell provider.

Fact Checklist

  • Apple filed solar patents that will allow them to power their electronic devices directly through solar cells.

  • Apple posted and filled a Thin Films Engineer position with solar experience.

  • Apple signed a $578m contract with GT Advanced Technologies to provide sapphire materials (sapphire cover screens).

  • Apple announced they would be spending $10.5B in capital during fiscal year 2014, including cutting-edge lasers.

  • Apple recently posted a Manufacturing Design Engineer position that includes "scribing" and "PVD coating", which relate to thin films (solar cells) and lasers.

  • Over 100 iPhones have been assembled with sapphire-covered displays.

Conclusion

I have provided substantial evidence that GT Advanced Technologies has the technology (Hyperion), the know-how (patents) and an existing relationship with Apple to deliver not only sapphire cover screens but thin-film solar cells for Apple's sapphire-covered electronic devices beginning in 2014.

There is one additional piece of evidence that might add the icing to this cake. GT Advanced acquired the exclusive rights to a PVD technology from Kyma Technologies just last week. Additionally, the press release mentions that "GT already has a high volume prototype tool incorporating Kyma's PVDNC technology". PVD coating is an important tool because it links back to one of the key solar clues listed within Apple's "Manufacturing Design Engineer - Mechanical Enclosures" job posting that appeared on Apple's website on January 13, 2014 (this can be found above in my linked article).

I expect GT to deliver over 75 million sapphire-covered iPhones, over 25 million sapphire-covered iWatches and over 15 million sapphire-covered iPod touch-es to Apple in 2014. The radical growth prospects between Apple and GT Advanced Technologies sit firmly on the shoulders of GT's Hyperion tool. GT's Hyperion tool will not only allow GT to cover the remaining Apple devices with sapphire laminates in 2015, but it will allow them to fully integrate solar cells across all of Apple's devices by the end of 2015.

Apple sold 77 million iPads in 2013, and iPad sales are expected to trend upwards by 10-12M units a year for the next several years. iWatch sales are expected to be close to 60m units over the first 12 months of the device launch. Apple's iPhone sales are expected to take back some lost in 2013 due to China Mobile sales and their amazing technological advances. I fully expect Apple to integrate GT's solar cells in their sapphire-covered devices beginning in 2014. The addition of thin-film solar cells should add at least $200-300M+ in incremental sales to GT's bottom line in 2014. I'm modeling GT sales in 2014 to at least double management's guidance of $600m in sales. GT's solar cell sales with Apple assuming a very conservative cost of $2-$3 per device sold could yield $1B in incremental revenue above and beyond GT's sapphire sales from Apple. If, as expected, GT and Apple leverage the Hyperion availability and technological capabilities to provide sapphire laminate covers on the iPad and the Macbook, it will instantly add over $1B of incremental annual sales to 2016 revenue estimates compared to 2014 sales estimates. The Apple relationship between solar and sapphire is setting itself up to deliver nearly $5B in annual sales to GT.

My final thoughts, the Apple deal with GT Advanced Technologies has more benefits under the sapphire cover than most of us are aware of today. I hope all of you reading this today listen closely to management's discussions on March 14th, 2014, so each one of you can crack the next code. I hope you enjoyed the update provided by the Obscure Analyst.

Disclosure: I am long GTAT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. I am long GTAT and no plans to buy or sell any holdings over the next 72 hours.