Applied, and where it’s headed. The gist: It’s not all about computers anymore. A growing portion of the company’s sales come from two businesses that are popular these days – solar equipment and big-screen LCD TVs.
Some quick excerpts from his comments:
“We’re about the same size as we were seven years ago. The difference in the business is really several things. Our equipment business was 90 percent of our business seven years ago, now it’s 65 percent.”
About the company’s move into producing equipment for making solar panels:
“Solar is a totally different business. Incrementally in the world there is a requirement for about 5,000 gigawatts a year. Today, last year the solar industry supplied 1.5 of those 5,000 gigawatts. At this point solar is so small relative to the size of the market it can grow unabated for an extended period of time. … It’s not a buying cycle like you’d think of in semiconductors. … It’s just a matter of how fast the costs can come down.”
On how demand for solar in Europe is driving solar equipment prices higher in places like India, where people need solar power just for basic electricity:
“There’s a short-term issue of silicon availability that drives the cost of the business. … We’re trying very hard to drive the cost per watt produced down …. Our idea is to put solar cells on glass – you just totally get away from the silicon shortage issue.” He pointed out that glass is dramatically cheaper than silicon, and said to expect news out of Applied Materials in the coming weeks about solar cells on glass.
On Applied’s moves into equipment for producing large LCDs:
“We formed a joint venture about ten years ago with Kimatsu. The growth in the market has happened in the last four years. … I think we’re very, very well positioned now in that market. The equipment that we sell is equipment for making LCDs. Plasma continues to get more and more into a niche space. LCDs have pretty much captured the market up to 40 inches.” As electronics companies move to larger sizes of LCD glass, Applied will see a revenue benefit, he said.
On offshoring:
“We have really engineering augmentation in India. We’re doing more hardware design in China, more algorithm development in Russia, and most of our fundamental product design and integration is done in Israel and Germany and Santa Clara.”
On the continuing high-end server battle between Intel (INTC) and AMD (AMD):
“Those products that you’re talking about really drive the leading edge of technology either in high performance or low power, or the combination of both. … There’s nobody else in our industry (besides Applied) that has the breadth of capability to go and really think about the integration of the transistors, how the transistors can be built. … As the market grows, that helps Applied Materials … as they push higher technology that’s an exciting part. … Depending on who wins, Intel or AMD, we just ship the machines to a different place.”