On the Record: Mike Splinter
The cost of flat-screen TVs has plummeted in just a few years, so Applied Materials CEO Mike Splinter sees no reason why the same can't happen with solar energy panels. After all, it's practically the same technology—and now his company, the world's largest supplier of manufacturing equipment to the semiconductor industry, is involved. Applied Materials moved into solar in 2006 with acquisition of a leader in the process of layering thin-film photovoltaic silicon onto glass or another low-cost support material. Less silicon means less cost. And Applied Materials aims to drive down solar costs from about $4 per watt to $1 per watt within the next two years and to 70 cents by about 2010, bringing closer the day when sunshine is competitive with other energy sources. Growth has slowed for Applied Materials' core business, chip manufacturing. Splinter spoke with Senior Writer Marianne Lavelle about his company's move into this new frontier.
Companies have long tried to reduce solar costs—what can you do differently?
We've been able to drive down the cost of semiconductors thousands of times in our 40 years in the business. More recently, we've gotten into equipment and technology for flat-panel displays, and I think we've all witnessed the cost dropping. As those industries started to mature, we started to look for new areas in which to utilize our capabilities and technology, and it became apparent that energy and the environment are huge issues of our time and need technologies and need solutions. Our technology for flat-panel displays could be used almost directly to make thin-film solar cells. We feel we can do a very good job of increasing efficiency and improving productivity and driving up the economies of scale and do what hasn't been done in solar in the last 30 years.
Why will people buy solar?
The fuel is free. Maintenance of these panels is zero. You can distribute them so you don't necessarily need a large grid. There are no moving parts. Solar has all the advantages, except for cost.
How much of your business is solar now, and how much do you see it growing?
Well, this year it'll be a small percentage. Our company has business of $9.3 billion, and we'll have [solar] orders for something over $400 million. But last year it was zero, so that's a relatively good acceleration curve.
You talk about how your traditional businesses have matured—is that why you're looking to new horizons?
The rate of growth in chip capital spending has been slowing. So if you start thinking, as all companies do, about what's going to happen to our company over the next five or 10 years, how do we get prepared? While chips are going to grow...the years of being able to grow at 20 to 30 percent every year—the opportunities for that in the silicon business are limited. Now, we can come up with new solutions and gain market share...But we have to have other avenues for growth.
As we went through this discussion, we changed the vision of the company. We coined a term—"We apply nanomanufacturing technology to improve the way people live." We took the word semiconductor specifically out. What we do is we deposit very thin films, microscopic films...not just for research but to feed the factories of the world, to really make a difference in the world.
This story appears in the June 25, 2007 print edition of U.S. News & World Report.
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