Displays Going Down, Solar Up at Applied
Applied Materials executives said they expect a sharp drop in orders for equipment making flat panel displays over the next few quarters, even as the company's Pivot system goes into use for the large display substrates. On the plus side: Silicon equipment is set to rebound, and solar equipment revenues are beginning to ramp.
David Lammers, News Editor -- Semiconductor International, 8/13/2008 10:56:00 AM
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On the plus side, solar equipment revenues doubled in the quarter, while silicon equipment reached the bottom of the downcycle, they said following the release of financial results for the third fiscal quarter, ending July 27.
Net sales were $1.85B, down 28% from the third quarter of fiscal 2007 and down 14% from the $2.15B in revenues for the second quarter of fiscal 2008. Display equipment revenues hit an all-time high for the quarter at $310M.
CFO George Davis said, “Orders for display equipment are going to be down substantially, but the upside is in the energy and environmental systems unit.”
Applied Materials CEO Mike Splinter said the fiscal third quarter was “the bottom of the trough,” with silicon equipment orders declining by 40% compared with the second fiscal quarter. Companies making NAND flash memories sharply cut back equipment purchases, with flash vendors representing only 9% of Applied’s sales to semiconductor manufacturers during the quarter. After the “significant fall off” in orders from flash vendors, flash equipment sales will rebound in 2009 as solid-state drives (SSDs) begin to absorb capacity, he said.
Though foundry utilization is in the 92% range, Splinter said the transition to 65 nm technology has been delayed by “design complexities.”
While Splinter said he expects 2009 to show a rebound in silicon equipment orders, the current economic environment shows a “continuing softening of the worldwide economies.” The third-quarter silicon downcycle was the worst since the fourth quarter of 2003, he said.
Bright spots include penetration of six customers with Applied’s new mask inspection tools; 23 “tool of record” positions for etch equipment that will result in strong revenues in the coming quarters; and increased metal deposition equipment sales to memory manufacturers making the transition to copper interconnects. Also, the first “Pivot” PVD system aimed at the large substrates went into production at a display manufacturer.
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| Applied Materials said that a display customer began using its Pivot PVD system for large-size substrates. |
Revenues doubled in the energy and environment systems division, which includes solar equipment aimed at both crystalline silicon and thin-film photovoltaics (PV). Four customers are producing solar panels from the 5.7 m2 glass substrates used at Applied’s turnkey SunFab lines, and a total of eight SunFab lines are in various stages of construction.
Applied has developed the ability to process silicon wafers measuring just 120 µm thick, which is 60% thinner than conventional solar-use wafers. The goal is to use fewer grams of silicon per watt of electrical power, Splinter said.
Many customers are still learning how to assemble solar panels from the 5.7 m2 glass substrates, leaving some to cut the large panels into one-fourth or one-half. “People have to get used to installing the bigger panels. That will take time, but we expect a pretty dramatic increase. Companies will go from one-fourth to full-size panels as their handling techniques catch up,” Splinter said.
By 2010, Applied expects thin-film PV technologies to catch up with the prevailing crystalline silicon approach. Applied also expects to see 25-30% operating margins from thin-film equipment sales by then. “Thin film will close the gap [in revenues] with crystalline silicon. That will happen in the next few quarters,” Davis said.
