A warning omen for the semiconductor industry is that the world's largest supplier of semiconductor production equipment, Applied Materials, saw orders for its solar generating equipment grow by six times in calendar Q2, while orders for its semiconductor production equipment shrank by 57 per cent.
The semiconductor industry has an uneasy relationship with the production equipment industry, with the semiconductor companies pressing for investment in new generations of equipment, and the equipment companies charging ever-increasing sums for tools to squeeze a profit from that investment.
With solar power generating equipment and equipment for manufacturing LCDs providing over half of Applied's new orders, the production equipment industry is not as dependent as it was on the semiconductor companies.
This was seen recently in the push by Intel, Samsung and TSMC for the equipment people to develop 450mm wafer processing equipment top which has met with resistance from the production equipment industry. Applied recently said it had no 450mm projects underway.
iSuppli reckons that worldwide investment in the production of photovoltaic (PV) cells will match the investment in semiconductor manufacturing by 2010.
"The market for PV cells is estimated to grow by 40 percent annually until 2010, and 20 per cent beyond," according to Dr. Henning Wicht, senior director and principal analyst, MEMS and photovoltaics at iSuppli, "nearly all market participants plan to increase their sales by 40 to 50 per cent per year during the next few years."
Applied had total revenues of $164.8m in calendar Q2, but profits from its semiconductor production equipment manufacturing operation were down by 74 per cent.
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