Applied Materials Buying Advent Solar Assets, Cheap


adventChip equipment maker Applied Materials (s AMAT) announced this afternoon that it is acquiring 7-year-old startup Advent Solar. Applied’s solar acquisition investments now total more than $1 billion, including $330 million for Italy’s Baccini and $483 million for Swiss solar wafer equipment company HCT Shaping Systems. But today’s announcement probably doesn’t represent a big uptick in total investments, according to Lux Research analyst Ted Sullivan. While the amount for the Advent deal is not being disclosed, it “was done very cheaply,” said Sullivan. “Investors did not get their money back — pennies on the dollar is a very safe assumption.”

That’s because Advent took a big hit at a bad time as a result of the credit crunch. “It was effectively acknowledged that Advent was a failed company,” said Sullivan. Right when the startup was ready to start manufacturing its cells for solar panels, the crunch hit. “They had to lay everyone off, shut down the fab, and switch to a quote-unquote licensing model,” Sullivan explained, which meant, “We’re essentially out of cash, let us recoup some of the cash and we’ll package up an IP portfolio for you.”

“What Advent has is emitter wrap-through technology,” said Sullivan, which is a “big lever to pull in terms of making solar grid-competitive” in residential roof-deck installations, helping boost the efficiency of solar panels. He expects Applied to integrate with the Baccini cell line, and Mark Pinto, chief technology officer and general manager of Applied’s Energy and Environmental Solutions Group, said in today’s release that Applied believes the technology will help drive down the cost per watt of solar electricity.

In that sense, today’s deal represents part of a larger trend in the solar market. “Players are looking for a custom recipe for high efficiency,” said Sullivan. “Given how much capacity is out there, there is no reason to build you own [cells] to prove new technologies.” So acquisitions of companies like Advent are part of the shift to a fabless market, he said.

Today, “VCs will fund a semiconductor company knowing there’s no reason to build production capacity,” said Sullivan. Now, with “so much idle production capacity sitting around in East Asia,” Sullivan expects to see increasingly similar willingness to support solar startups with no means or intention of producing their own cells. Eventually solutions for higher efficiency will be less reliant on home-brewed “custom recipes,” and more available as turnkey systems.

Most of the venture-backed players with incremental advances for crystal and silicon cell efficiency will likely be bought up by incumbents as they come up against the hurdle of fabrication, said Sullivan. He pointed to 1366 Technologies, which “recently rejiggered and is now pursuing equipment development,” hoping to ride the wave of this manufacturing revolution for solar power. A crucial difference between 1366 and Advent, said Sullivan, is that 1366 “was able to pull it off before they ran out of cash. They could foreseeably be picked up by someone like Applied Materials that also makes cells.”

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