Applied Materials Inc. (AMAT), the world's biggest supplier of machines that make solar panels and computer chips, said China remains a bright spot for the company, propping up global sales even as parts of Europe remain at risk.
Applied Materials Inc. (AMAT), the world's biggest supplier of machines
that make solar panels and computer chips, said
China
remains a bright spot for the company, propping up global sales even as parts
of
Europe
remain at risk.
"I thought personally that this year was going to be a down year, but it
will be bigger than two years ago" in terms of global sales, said Applied
Materials Chief Technology Officer Mark Pinto. In a measure of how important
China
is to
the firm, he relocated to
Beijing
in
January and the company has built its newest research lab in the western
Chinese city of
Xian
.
(This story and related background material will be available on The Wall
Street Journal Web site, WSJ.com).
Earlier this month, Applied Materials said it swung to a profit in the second
fiscal quarter ended May 2 after revenue doubled when stronger demand for
products like cell phones, and personal computers outweighed weakness in the
solar panel market. The company said machines to make the type of solar panels
called thin-film solar panels has been slower to take off than expected.
The solar industry has been recovering from a slowdown last year after
Spain
, one
of the world's biggest markets for the alternative energy, abruptly cut
generous subsidies it could no longer afford amid the global financial crisis.
Now, Applied Materials thinks
China
will
provide a big boost for solar-power demand. Applied Materials signed an
agreement Wednesday to sell equipment to manufacture thin film-solar panels to
China
manufacturer ENN Solar Energy Co. for a new big solar-power farm in
Inner
Mongolia
to be built by China Energy Conservation & Environmental Protection
Group, a leading state-owned alternative-energy project developer. On
Wednesday, Applied Materials also signed a preliminary agreement to work with
China Energy to monitor the performance of the solar panels.
Such projects underscore a major shift under way in
China
. Until
recently,
China
has
moved slowly in developing large solar-power farms because government officials
worried that they were too expensive. Chinese companies are among the world's
biggest suppliers of solar panels, but until recently they have exported most
of their products because of a lack of government support for the domestic
market, while the overseas market was booming because of subsidies.
By contrast, government support of wind power means
China
has
the world's biggest installed capacity for wind turbines. But growth is so fast
that some 30% of wind power capacity isn't hooked up to the electricity grid,
and the government has warned that there's overcapacity in turbine
manufacturers.
"Right now, solar has been handled very pragmatically by the
government," Pinto said Thursday.
Broadly speaking there are two types of photovoltaic cells: crystalline and
thin film. Most Chinese solar-panel makers manufacture crystalline panels which
use more silicone but tend to be more efficient. The newer-technology thin-film
panels can perform just as well or better in some conditions but are harder to
make. Pinto said thin-film panels are easier to install in big-scale projects
like the huge solar-power farms
China
is
planning, while the crystalline models are better for rooftops where space is a
premium.
"The power-plant market, because it naturally fits here in
China
, will
see steady growth," Pinto said. "The rooftop market in
Europe
,
California
and
Japan
could
see some risk."
Still, there is the potential for a glut of solar-panel makers in
China
, he
cautioned. "The risk is on the other side. We have over 100 crystalline
silicone customers in
China
. There's
a huge number of them and they just keep popping up. That's really where the
China
bubble is. Not on the demand end," he said.
Despite gloomy projections, sales have remained surprisingly strong in other
parts of
Europe
, especially
Germany
, and
continue apace in
Japan
and
California
because panel prices have fallen, Pinto said. Analysts say pressure from
low-cost Chinese manufacturers has helped push down global prices.
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