Specifically, the company’s Energy and Environmental Solutions group is placing its bets on crystalline silicon, or “c-Si,” photovoltaic solar and light emitting diode, or LED, technologies.
From a business standpoint, that will result in several changes:
- Approximately 400 to 500 jobs cut from a total of about 13,000.
- The company’s thin-film solar R&D labs outside of Santa Clara,
Calif. will close.
- Decrease annual operating expenses by at least $100 million annually.
- Make EES a profitable segment in fiscal year 2011.
- Discontinue sales to new customers of its turnkey SunFab thin-film solar panel manufacturing line.
- Continued R&D efforts to improve thin film panel efficiency in the company’s solar research lab in Xi’an, China.
“When Applied announced the SunFab business in 2007, we saw high prices for natural gas and poly silicon, strong commercial and policy interest in utility-scale PV and a ready financing environment,” CEO Mike Splinter said on a conference call about the news. “Delays in the growth of utility-scale solar market combined with competitive pricing pressure from crystalline silicon have resulted in a market that would make it difficult for us to return value to shareholders in the medium term. These conditions have made it impractical for us to continue on our path.”
Applied materials senior vice president Mark Pinto added:
Technology-wise, we think in every aspect we’ve met or exceeded what we thought the technology would do. The issue is that, as you know, there’s a lot of crystalline silicon coming onboard and exceeding any expectation we had of that as well, which is going to really threaten the prices that all the customers in this area are going to have, and the utility-scale market has not taken off like we thought a couple years ago. So we still believe in the technology. We are still going to invest in the technology, and as things improve, as customers are interested in this, which we think they will be in the future, we’ll work with them potentially with a different business model.
The company said it also plans to divest its low-emissivity architectural glass coating products but continue development in similar emerging technologies, such as “smart” electrochromic glass.
“It’s hard to predict exactly how the market will develop, and I think that primarily depends how the overall utility-scale market develops and what kind of upgrades and capacity expansions are going to need,” Splinter said.
The cost of the restructuring comes to between $375 million to $425 million.