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Applied Materials conducts euthanasia on its long suffering Amorphous Silicon thin film Sunfab division

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Applied Materials has finally shut down its SunFab Thin Film division after continuous losses in the last couple of years.The Solar Thin Film Technology has seen a torrid few quarters as falling polysilicon prices have destroyed many of the thin film business models.Even companies with big pockets like Masdar have given up on their thin film ambitions.Solyndra the CIGs media posterboy was also forced to call off its IPO as it continues to make losses with costs too high.Crystalline silicon technology has seen its price crash by more than 50% in the last 2 years as raw material polysilicon prices fell from a high of $400/kg to $50/kg .Thin film companies which had built their plants in the days of severe polysilicon shortage suddenly found the environment completely changed.

AMAT had won huge orders for SunFab turnkey line in 2008

Before the Global Financial Crisis and the crash of the solar market,Applied Material’s had won huge Gigawatt scale orders for its turnkey Sunfab a-Si equipment.AMAT won customers like Moser Baer,Signet Solar,Q-Cells,Suntech etc.It looked like Applied Materials was going to be a solar equipment leader just like it was the biggest semiconductor equipment company.However things soured for Applied Material customers as one by one they wrote off their investment.Q-Cells ,Suntech and Signet have officially and unoffically given up their amorphous Silicon plans.Other smaller customers also will have no choice but to shut down their AMAT fitted plants as well.

SunFab had a difficult last few quarters

Applied Materials had already shifted its workers and technology research to China this year after firing many workers in the United States.With little hopes of making its SunFab equipment economically feasible,AMAT took the right decision to euthanize its Thin Film Technology line.AMAT still has a big crystalline silicon equipment division which makes wire saws and deposition equipment.It will look to focus on c-Si technology and LED Lighting .The shutting down of the thin film line will lead to a ~$425 million charge off besides layoffs for 500 workers.Amorphous Silicon has been facing tough times with Sharp the only player showing reasonable traction in this space.However its cost and efficiency are not known.

Applied Materials Announces Restructuring of Energy and Environmental Solutions Segment – Applied Materials

Applied Materials, Inc. (Nasdaq:AMAT) today announced plans to restructure its Energy and Environmental Solutions (EES) segment to put a primary emphasis on opportunities in crystalline silicon (c-Si) solar and advanced energy, including light emitting diode (LED) technology. Upon completion of the restructuring plan, annual operating expenses are expected to decrease by at least $100 million on an annualized basis. The restructuring plan is intended to make EES a profitable segment in fiscal year 2011.

As part of the restructuring, Applied will discontinue sales to new customers of its SunFab™ fully-integrated lines for manufacturing thin film solar panels and will offer individual tools for sale to thin film solar manufacturers, including chemical vapor deposition (CVD) and physical vapor deposition (PVD) equipment. R&D efforts to improve thin film panel efficiency and high-productivity deposition will continue. The company will support existing SunFab customers with services, upgrades and capacity increases through its Applied Global Services segment. Applied’s solar R&D center in Xi’an, China will concentrate on advancing its c-Si solar and other technologies.

The cost of implementing the EES restructuring plan is expected to be in the range of approximately $375 million to $425 million, or $0.18 to $0.21 per share, which will be reported as cost of products sold and restructuring and asset impairments in the company’s consolidated statements of operations for the third quarter of fiscal 2010. As part of the total pre-tax cost, Applied anticipates that it will record: (i) inventory charges of up to $240 million; (ii) equipment and intangible assets impairment charges of up to $95 million; (iii) employee severance of up to $50 million; and (iv) other obligations of up to $40 million. This action is expected to impact between 400 to 500 positions globally. A number of affected employees may transfer to other groups or functions within the company. Cash expenditures related to these charges are expected to be no more than $80 million. In addition to the charges under the EES plan, the company will record a favorable adjustment of approximately $20 million to the restructuring plan previously announced on November 11, 2009 due to changes in business requirements.


Sneha Shah

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