SAN JOSE--Cypress Semiconductor Corp. today announced plans to invest $8.8 million in a privately-held manufacturer of silicon solar cell products, called SunPower Corp. in nearby Sunnyvale, as part of an effort to accelerate its revenue growth beyond current chip products.
Cypress has set a corporate target of reaching $1 billion in sales per quarter, and it believes ultra-high efficiency silicon solar cells could help the company grow faster than its core communications IC business, said T.J. Rodgers, president and CEO of Cypress. Cypress posted revenues of $193.2 million in the first quarter this year, which was 26% below $262.3 million in Q1 of 2001 before the industry's recession.
"The solar cell business represents a great opportunity for several reasons," said T.J. Rodgers, president and CEO of Cypress. "Even without the negative effects of political volatility, conventional sources of energy, such as oil, will be supplemented or replaced with renewable forms of energy.
"After 30 years of continuous improvement, the science of solar power has matured to the point where it has become cost-effective enough for commercial implementation," Rodgers said. "For example, Cypress recently installed a solar-power array on the roof of a new building in its San Jose campus, and the array is currently feeding the equivalent of 40% of the power of that building into our campus-wide power grid. This means our investment will pay for itself and deliver free power thereafter.
"We expect other Silicon Valley companies to follow this model and for the trend to pick up momentum in the U.S. and around the world in the years to come," added the CEO.
Under the terms of an agreement, Cypress will invest $8.8 million for an initial 44% stake in SunPower, with an option to increase its stake. SunPower produces a range of products, including concentrator solar cells (which use a lens or mirror to concentrate sunlight); one-sun solar cells and arrays for specialty applications (such as solar-powered aircraft and race cars); and silicon-based optoelectronic devices for telecommunications and industrial applications.
SunPower introduced its first commercial product in 1994, and it claims its revenue has grown at a compound annual growth rate of 60% per year. The Sunnyvale-based company said its solar cells are 33% more efficient than today's most efficient commercially-available cells.
"The solar power industry in general -- and SunPower specifically -- are already major consumers of silicon wafers," Dick Swanson, president and CEO of SunPower. "As the demand for solar power grows, so will the solar power industry's sustained and significant demand for silicon."
Cypress said the retail solar cell module market is projected to double from its current level to more than $3 billion in 2006, based on a forecast from Strategies Unlimited.
"In an effort to grow faster than the revenues from our core communications businesses -- and to accelerate our growth toward our objective of $1 billion of revenue per quarter -- Cypress is seeking to engage in investment-level transactions with related but independent companies that we have the option to acquire," Rodgers said.
"Our plan is to consider businesses that we believe will place only modest demands on our management, leaving us with the necessary bandwidth to maintain focus on our key communications businesses," said the CEO explaining the expansion strategy at Cypress. "SunPower meets all of these investment criteria."