Anger mounts as Applied puts SunFab on notice

Anger mounts as Applied puts SunFab on notice
SAN JOSE, Calif. -- The clock is ticking for Applied Materials Inc.'s SunFab solar unit.

Applied has given its SunFab solar unit a deadline to meet certain targets by July--or the company will cut its funding, according to sources. At that point or beyond, Applied may pull the plug on SunFab, sources said. Applied itself said the SunFab unit must stand on its own.

But at the same time, there are growing fears among Applied's SunFab employees in U.S.--as well as other company employees--that the company will soon hand out pink slips in the U.S., at a time when it continues to expand in Asia, sources said.

The events are causing concern and anger among employees at Applied (Santa Clara, Calif.). The company, the world's largest fab tool and solar equipment supplier, sells both standalone solar equipment as well as a turnkey solar line, dubbed SunFab. SunFab is based on a thin-film technology called amorphous silicon. Applied has sold turnkey SunFab lines to a number of customers.

Last summer, Applied gave the SunFab unit two years to meet its goals. But as recently reported, Applied plans to lower its investments in its SunFab technology amid disappointing results and losses in the arena.

Then, in an internal meeting held on Tuesday (April 6), Michael Splinter, chairman, president and chief executive of Applied, gave the SunFab unit a ''deadline by the end of July--before he cuts off all funding'' for the technology, according to one source.

According to the source, Splinter gave the SunFab group the following warning at the meeting: "We have already given you $500 million to develop this technology. Now, we will not give you anymore unless you give AMAT something. That something is 10 percent efficiency."

At present, SunFab's solar technology is running at about 8-to-9.1 percent efficiency right now. The company is also working on a project called SunFab 2.0, which is said to reduce the cost by 50 percent, sources said.

However, Applied had been dogged by rumors about the performance of the SunFab equipment. Applied's SunFab customers, Moser Baer, SunFilm and others, are struggling to the ramp technology. And last year, a privately-held company cut the value of a previously announced order for Appled Materials' SunFab solar panel production equipment to $250 million from $1.9 billion.

At the meeting, according to the source, the Applied CEO also stated that perhaps the SunFab model would possibly work in China or India. In other words, ''Mr. Splinter is finding a reason to rid himself of his U.S. employees,'' the source said.

Applied did not deny that the meeting took place on Tuesday. It did not address or discuss the contents of the meeting. As before, Applied insists it remains committed to SunFab.

The company issued the following statement about the meeting and the fate of SunFab: ''SunFab, like all Applied Materials' businesses, must stand on it's own merits.

"Applied Materials remains committed to the SunFab product and the thin film silicon PV roadmap. Utility-scale solar can be a major force in the renewable energy revolution and SunFab offers the industry's best option for cost-effective, large-scale solar PV. Several customers are gaining traction following the economic downturn and a number of banks are providing financing for large-scale projects using SunFab panels. Nine lines are signed off on and customers have 70MW of projects in the ground and more than 400MW are in construction or the planning pipeline for the second half of 2010 and 2011.

''Given where we are in the overall product lifecycle we are now able to reduce the spending run-rate for SunFab. When we started the program we had to design the equipment and the infrastructure for an entire factory line to handle Gen 8.5 (5.7m2) glass. The majority of the infrastructure development work, and related investment, is now behind us. Going forward our investment can focus on improving panel efficiencies and lowering production costs -- taking full advantage of Applied's core expertise.''