Robert Castellano

Applied Materials: Displays, Solar Panels and Correcting Tom Friedman

"Returning for a moment to Thomas Friedman's chagrin. Friedman took a similar tour of Applied last week and in an editorial in Tuesday's New York Times lamented the lack of a Sun Fab plant producing PV in the U.S. and the necessity of importing PV panels from China, equating that to importing Mideast oil. Which is a lazy parallel on his part".

What do you mean a lazy parallel on his part? I used the expression in March in a Seeking Alpha article entitled "
Which Is Worse: Buying Solar Panels from Eurasia or Oil from OPEC?" which Friedman lifted from me. Read it and understand the logic behind what I said and what he referred to.

Why are you being judgmental? Remember, you're the ones that put your Seeking Alpha articles in the chip section when PVs are not chips, (read my comment about it in a recent article by greentechmedia in Seeking Alpha) so if you don't know the difference between a chip and a PV except that Si is the common denominator, clearly you are not in a position to judge the accuracy of intuitive comments.

Semis' Downturn - Which Companies Will Survive, Part 1

I pointed out in a Seeking Alpha article that there is no longer a correlation between semiconductor growth and equipment spending. seekingalpha.com/artic...
Since 2001, semiconductor equipment have been smarter in increasing the number of chips made without a corresponding increase in equipment spending. The major reason is the movement to 300mm wafers, responsible of a 2.25x increase in chips made for the same number of 200mm wafers.

There is a loose correlation between GDP and semiconductor production. The greater the growth in the economy, the greater the spending on technology. Our analysis at The Information Network (theinformationnet.com) suggests that with a worldwide GDP growth rate of 0.5 (International Money Fund's January 28 2009 forecast), the corresponding decrease in semiconductor sales will be minus 32%. Look for a more complete picture in about a week in Seeking Alpha.

Kirk, I love your comment about Gartner (by the way I read your comments regularly in Silicon Investor. I have been competing with Gartner since I started The Information Network in 1985. I couldn't agree with your blog more. Problem is Gartner has this quadrant system where they promote companies. As these companies want to get on Gartner's good side and be in the right quadrant, they continue to spend money on their market analysis, even though it may be wrong.

Six Reasons for Cloudy Skies on the Solar Energy Industry

Gentlemen (sic) you're shooting the messenger (me) over issues that you have strong convictions about (perhaps financial ones as well) but you miss the point of what I am trying to say -- unless you have a unique IP, and 6-8% efficiency thin film PV is a me-too technology unlike the the poly and FSLR sectors. So I am down on thin film, not the overall solar industry. With poly coming down on the spot market, it does bode well for lower $/watt, which has a negative impact on the thin film PV market. Talk to utility companies as I have and ask them if they prefer lugging, wiring, and testing twice the number of thin-film panels to a solar farm compared to a poly panel with twice the wattage. And the market for thin-film panels is virtually non-existent on rooftops because of the size of a roof.

Secondly, you will see less subsidies for alternative energy in the near future, not more, as many states have budget problems and the euro region is only now getting into a recession. Who has $25K to put solar on their roofs these days. I mention Germany, but it is the entire euro region (and UK) that is affected by the strong dollar.

Third, the run-up in oil was a catalyst for other alternative energy technologies. They did not sit still in technology, marketing, and expansion during these times. Now, solar has to compete with a number of other technologies such as wind and Pickens. And go to Wikipedia and look up carbon footprint and compare different technologies.

Fourth, I mentioned capacity. There is indeed a 55% utilization rate out there. Go to each of the 103 solar companies I compiled and see what their capacity is. Total it, and then see how much solar panels will be purchased in 2008 and 2009. The numbers speak for themselves.

Applied Materials Leads by Example

The semiconductor industry, AMAT's flagship line, is in the toilet, that's issue number 1. In the solar industry, AMAT is selling a "me-too" product line -- high cost vacuum deposited low efficiency (8%) amorphous silicon. That was a good idea AMAT had when it had a lot of its equipment sitting around waiting for the LCD industry to wake up (the original design of its solar machines) and decided to call them a Solar Machine. At the time, no one could get polysilicon to make the really good stuff and there were only a few companies offering a turnkey approach to making the bad stuff, such as Oerlikon. AMAT was in the right place at the right time. Now, there is no shortage of polysilicon, CdTe sales are going through the roof because of high efficiencies, CIGS is starting to see some revenue stream, also with a high efficiency. The amount of capacity in hand to make solar cells is 2X the actual sales this year and in the forseeable future. Oil prices are plummeting, which when at $145 a barrel was a driving voice for renewable, and European countries are eliminating subsidies. Finally Pickens was instrumental in making the country see the value of wind. So where does that leave AMAT?