Applied Material - $1.9 Billion Order

Applied Material just got an order for $1.9 Billion to set up some solar factories. Wow! Applied Materials is the manufacturer for Semiconductor equipment and has moved to diversify into solar cells, which are still mostly made out of Silicon. The factories they are building could produce a gigawatt a year of cells, just under 10% of what was produced last year (12 Gigawatts). Revenue each year for Applied Material is about $2 Billion a quarter, so an order for $1.9 Billion is was about 25% of their revenue. With this additional revenue, now it's only 20%.

So what does this show? Applied Material is now a player in solar? Obviously. It also shows the rapid growth that is seen in the market. Applied Material did a substantial amount of R&D for reducing productions costs for solar. It will be interesting to see what the cost of the cells produced by the factory will be. And how the shortage of silicon will impact this. Of course when you are taking almost $ 2 Billion, you might decide to set up your own factory to make raw silicon.