Making hay while the sun shines

The burgeoning growth of photovoltaic solar power and other sources of alternative, “green” energy are having positive consequences for an unexpected line of business: semiconductor production equipment.

Photovoltaic (PV) solar cells are semiconductor devices, as you may or may not know. Most of them are made with silicon substrates. Silicon is the most common of semiconductor materials used by the microchip industry. It’s not a stretch, then, that the equipment used to make semiconductors is strongly akin to the equipment used to make PV solar cells.

It’s also not a surprise that the world’s biggest purveyor of semiconductor fabrication equipment, Applied Materials, is getting huge in the market for solar cell production gear. Applied got into the market two years ago with its acquisition of Applied Films Corporation. Since then, the company has extended its SunFab line of equipment with more acquisitions and internal development.

The market for regular old semiconductor equipment is in the doldrums these days, mostly due to orders drying up from the hyperactive memory chip business, but some equipment vendors have a countercyclical antidote to those blues. Applied last week reported that quarterly sales in its Energy and Environmental Solutions segment grew sixfold from a year ago, to $174M from $29M. On the flip side, sales in the plain old Silicon segment were down 57% from the year before, to $756M from $1.77B. Solar power isn’t making up the difference, but it’s helping to patch a painful period for Applied.

A smaller vendor, Amtech Systems, also had some impressive growth in solar-related equipment sales to report last week. The company’s quarterly sales of solar cell production equipment quadrupled from the year-ago period, and represented about two-thirds of all sales. While orders for solar cell gear slowed down from the prior quarter, Amtech’s backlog of such equipment is nearly four times what it was in 2007.

GT Solar International, a sizable supplier of solar-related production equipment, is among the small number of companies to complete an IPO this year, going public last month. The company posted fiscal 2008 sales of $244M and was significantly profitable for the year.

With the solar energy market dependent on politicians around the world deciding whether to keep government subsidies and tax incentives in place for PV products, it’s uncertain whether solar power will present an ever-growing business opportunity for years to come. Among semiconductor equipment vendors, though, it’s looking like a godsend in a troubled market.