TAIPEI, Taiwan--Chip equipment giant Applied Materials expects the market for solar power to grow significantly over the coming years, benefiting from declining production costs.
Tight supplies of polysilicon, a key component in solar-cell production, will ease from this year, helping growth to pick up, said Winfried Hoffmann, chief technology officer of Applied Materials' solar business group.
The company is the world's largest maker of chipmaking equipment, with some 70 percent of orders coming from the memory chip sector. But it sees solar energy as a big growth area.
"Within the next three to five years, I'm pretty sure we will see a nice increase every year of anything in the 25 percent to 30 percent range," Hoffmann said.
Winfried Hoffmann
He did not give a breakdown for how much the solar business contributed to the firm's bottom line. But he questioned other estimates of much faster growth. "I would not follow some arguments that are predicting a market in 2010 of 14 gigawatts from 1.8 gigawatts last year. A 6-gigawatt market would be very nice for annual installed systems."
One gigawatt is equivalent to 1,000 megawatts.
Applied Materials also produces equipment to make solar modules--panels of solar cells used to power such things as street lights or water heaters. It has contracts to deliver production lines to eight customers, Hoffmann said.
In August, it raised its estimate of contracts to be signed in its solar business in 2007 to more than $600 million from $400 million, amid growing demand for alternative-energy sources as oil prices soar.
Applied Materials' production of solar-equipment lines is also growing with the introduction of manufacturing lines that produce thin-film silicon solar modules that can reduce costs of large installations by more than 20 percent.
"Based on a 5 percent decrease in production cost and price, which we have seen already over the last 15 years and which, for sure, will be true for the next 15 to 20 years, that will bring us from today's 20 cents to 40 cents per kilowatt hour for a household to 5 cents to 10 cents," Hoffmann said.
"That's comparable to clean-coal large-plant production cost of electricity. That's big business," he said.
Rapid global expansion in the production of solar cells as record oil prices fuel the search for alternative-energy sources has tightened supplies. But Hoffmann said new investment in polycrystalline silicon production would ease the supply crunch.
"For the last two years while the limiting factor for the growth of our industry, like polysilicon, last year the big chemical companies have decided to invest in our industry," said Hoffmann.
"So in the course of this year and next year, there will be plenty of silicon coming along," Hoffmann said.
Hoffman was speaking at a solar-energy conference here, which has emerged as a center for solar-cell production along with China amid soaring oil prices.
Top players in the two markets include Motech Industries, E-Ton Solar, Suntech Power and JA Solar Holdings.
