Applied Materials Strategy Analysis Presentation

SHAYNE ARMSTRONGSETH BREEDLOVE

ALBERT KING

Agenda

AMAT BackgroundCurrent StrategyEnvironmental AnalysisKey Considerations for the FutureScenario AnalysisShort Term StrategiesLong Term Strategies

Applied Materials

BUSINESS APPLICATIONS

CRYSTALLINE SILICON SOLAR MANUFACTURING SYSTEM

LEADING/PATENTED FLAT PANEL DISPLAY MANUFACTURING SYSTEM SUNFAB THIN FILM PRODUCT 5.7m2

SEMI-CONDUCTOR PRODUCTION EQUIPMENT

FINANCIAL HEALTH 10Q-Q1

EES– Energy Environmental Group (thin film and crystalline photovoltaic) <12% of revenue> Only division with an operating loss

AGS– Applied Global Services (logistics support) <24% of revenue>

Silicon (SSG)– Semiconductor Wafer Fab <58% of revenue>

Flat Panel Display manufacturing Equipment <6.4% of revenue>

Market StrategyMarket Strategy Growth StrategyGrowth Strategy

Patents/technological investments

Partnerships/Acquisitions

Government tax breaks (A.R.R.T.A)

Developing cutting edge nanomanufacturing tools

Innovative Technologies (high efficiency/high output thin film)

Technological facilities (Solar Power Research in Xi’an China and Alzenau, Germany)

Current Strategy

P.E.S.T.P.E.S.T. Porter’s FivePorter’s Five

Political Governments are major drivers of

alternative energy—including Solar Feed-in tariff

Economic The World economic crisis is affecting the

solar industry Expensive technology, but tax incentives

offset costs Social

Carbon footprint reduction Environmental consideration for all

purchases Technological

Alternative energy production becoming required

Efficiency and Cost effectiveness Break through in alternative power

transmission

Rivalry Infant & Growing Industry – High Rivalry in

Future Current economy may shake out many new

entrants. Substitutes:

Electricity Doesn’t Have a Substitute Source of Power Does (Coal, Wind, Solar, Oil,

Hydropower, Bio-Fuel Nuclear etc.) Barriers to Entry

No Industry Production Standard/Lack of Compatible Technologies

Buyer & Supplier Power (Two Forces - Moderate) Applied Materials Can Manufacture It’s Own

Supply. Hard to Find Financing for Consumers Lack of Consumer Awareness of Where and

How to Purchase

Environmental Analysis

Considerations for Future Strategy

Trends Climate Change Evolving Solar Technology Developing Countries Leapfrogging Technology

Uncertainties Technological Advancement Oil Prices and Alternative Energy Government Legislation

Stakeholders Government Auto/Construction/Farming Industries Consumers

Three Scenarios

Scenario 1: “Sunny days are here again” New solar power cells have achieved at least 80% efficiency Cost per peak watt hour is below $3.00 65% of homes and businesses by 2025 are powered solely by solar power US exports excess solar energy overseas

Scenario 2: “Running around in circles” The depression of 2007 has lasted longer than expected The consumer loses interest in the benefits of solar Governments are still investing in green tech and innovation but the pace of progress

slowed the movement toward greater efficiency and energy costs

Scenario 3: “It’s as hot as hell in here” The intense resistance of oil companies win the market over The U.S. government stops all funding for alternative energy Innovation is non-existing and the U.S. public is more dependent on foreign oil than

ever.

Short Term Strategies

Provide Financing Solutions in Solar Industry Partner with Banks for transferring of funds Partner with solar panel installers to provide financing

Enter Solar Panel Installations Partner/Purchase Solar Panel Installers to Gain Access

to Consumers

Continue to Purchase Competitors and Patents (already successful strategy)

Continue Building Solar Farms

Long Term Strategies

Improve the Efficiency of Clear Solar Panels—One Technology, Many Applications Auto Industry Recreational Vehicles Home Builders Commercial Builders

Invest in Next Generation Solar Panels Farm Industry Partnerships

Considerations for Future StrategiesImagine Playing fields

Potential

Playing Fields

Judo Strate

gy

Shaping the

Playing Field

Market Entry

Auto Industry

Outcomes

Construction

Outcomes

Farm Industry

Outcomes

Synthetic solar cells can be grown in tobacco plants and E. coli bacteria.The method offers a cheap, environmentally friendly way to make electricity

Questions?

Sources

LaMonica, Nartin. "Transparent plastic solar cells fitted into wind." CNET News 08 May 2009: n. pag. Web. 13 Mar 2010. <http://news.cnet.com/8301-11128_3-10235480-54.html>.

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"DATAMONITOR: Applied Materials, Inc." Applied Materials, Inc. SWOT Analysis (2009): 1-10. Business Source Premier. EBSCO. Web. 13 Mar. 2010.

Anonymous, . "Largest U.S. Solar Photovoltaic System Begins Construction at Nellis Air Force Base." Red Orbit 23 Apr 2007: n. pag. Web. 13 Mar 2010. <http://www.redorbit.com/news/business/911267/largest_us_solar_photovoltaic_system_begins_construction_at_nellis_air/index.html 

Materials, Applied. "Applied Materials Details Progress Towards Industrializing PV Solar." Business Wire 21 Sep 2009: n. pag. Web. 13 Mar 2010. http://www.businesswire.com/portal/site/appliedmaterials/?ndmViewId=news_view&newsId=20090921005896&newsLang=en

Applied Materials, Press Release "Applied Materials Opens Advanced Solar Research and Customer Demonstration Facility in Xi’an, China." Business Wire 26 Oct 2009: n. pag. Web. 13 Mar 2010. <http://www.businesswire.com/portal/site/appliedmaterials/?ndmViewId=news_view&newsId=20091026005469&newsLang=en>.

Applied Materials Press Release, . "REPLACING PHOTO Applied Materials Dramatically Reduces Cost and Increases Productivity of Solar Ingot Squaring with New HCT Diamond Squarer System."http://www.businesswire.com/portal/site/appliedmaterials/?ndmViewId=news_view&newsId=20090921005499&newsLang=en. Business Wire, 21 SEP 2009. Web. 13 Mar 2010.

Applied Materials Press Release, . "Applied Materials Details Progress Towards Industrializing PV Solar."http://www.businesswire.com/portal/site/appliedmaterials/?ndmViewId=news_view&newsId=20090921005499&newsLang=en. Business Wire, 21 SEP 2009. Web. 13 Mar 2010. <http://www.businesswire.com/portal/site/appliedmaterials/?ndmViewId=news_view&newsId=20090921005896&newsLang=en

Sources

  Applied Materials Press Release, . "REPLACING PHOTO Applied Materials Introduces Multiple Printing Capability for Producing Higher Efficiency Solar

Cells." Business Wire. Business Wire, 17 SEP 2009. Web. 13 Mar 2010. <http://www.appliedmaterials.com/news/solar_strategy.html   Applied Materials, Press Release "Applied Materials Launches Strategy to Reduce the Cost Per Watt of Solar Power." Business Wire 05 SEP 2006: n. pag. Web. 13

MAR 2010. <http://www.businesswire.com/portal/site/appliedmaterials/index.jsp?epi-content=GENERIC&newsId=20060905005378&ndmHsc=v2*A1167656400000*B1178676791000*C4102491599000*DgroupByDate*J2*N1002992&newsLang

  Applied Materials, Press Release. "REPLACING PHOTO Applied Materials Introduces Multiple Printing Capability for Producing Higher Efficiency Solar Cells

CORRECTION…by Applied Materials, Inc. ." Business Wire17 SEP 2009: n. pag. Web. 13 Mar 2010. <http://www.businesswire.com/portal/site/appliedmaterials/index.jsp?epi-content=GENERIC&newsId=20060905005378&ndmHsc=v2*A1167656400000*B1178676791000*C4102491599000*DgroupByDate*J2*N1002992&newsLang=en&beanID=547561197&viewID=news_view>.

  Applied Materials, Press Release. "Solar fab2farm™ Model Offers a Blueprint for Affordable Clean Energy and Local Economic Development." Business Wire 10 SEP

2009: n. pag. Web. 13 Mar 2010. http://www.businesswire.com/portal/site/appliedmaterials/?ndmViewId=news_view&newsId=20090910005290&newsLang=en   Applied Materials Press Release, . "Applied Materials Announces IEC Certification of World’s Largest Solar Panels." Business Wire. Business Wire, 29 May 2009. Web.

13 Mar 2010. <http://www.businesswire.com/portal/site/appliedmaterials/?ndmViewId=news_view&newsId=20090910005290&newsLang=en   Applied Materials Press Release, . "Sunfilm and Applied Materials Achieve Solar Industry Milestone with Certification of World's First Tandem Junction SunFabTM

Line." Business Wire. Business Wire, 20 APR 2009. Web. 13 Mar 2010. <http://www.businesswire.com/portal/site/appliedmaterials/?ndmViewId=news_view&newsId=20090419005070&newsLang=en

  Applied Materials Press Release, . "Applied Materials Delivers Major Advances to Lower Solar Cell Cost with New HCT MaxEdge Wire Saw." Business Wire. Business

Wire, 16 MAR 2009. Web. 13 Mar 2010. <http://www.businesswire.com/portal/site/appliedmaterials/?ndmViewId=news_view&newsId=20090419005070&newsLang=en

  Applied Materials Press Release, . "Applied Materials Revolutionizes Solar Module Manufacturing with Breakthrough SunFab Thin Film Line." Business Wire.

Business Wire, 20 APR 2009. Web. 13 Mar 2010. <http://www.businesswire.com/portal/site/appliedmaterials/?ndmViewId=news_view&newsId=20090419005070&newsLang=en

  Applied Materials Press Release, . "Applied Materials to Accelerate Its Solar Roadmap with Acquisition of Baccini." Business Wire. Business Wire, 19 Nov 2009. Web.

13 Mar 2010. <http://www.businesswire.com/portal/site/appliedmaterials/template.MAXIMIZE/menuitem.f087c2effa21866f46727587e6908a0c/?javax.portlet.tpst=ae0ed867f9c9a6e86d598c87a909a92c_ws_MX&javax.portlet.prp_ae0ed867f9c9a6e86d598c87a909a92c_vie wID=news_view&javax.portlet.prp_ae0ed867f9c9a6e86d598c87a909a92c_newsLang=en

Sources

Applied Materials Press Release, . " Applied Materials Acquires HCT Shaping Systems to Expand Solar Manufacturing Solutions." Business Wire. Business Wire, 23 Aug 2007. Web. 13 Mar 2010. <http://www.businesswire.com/portal/site/appliedmaterials/template.MAXIMIZE/menuitem.f087c2effa21866f46727587e6908a0c/?javax.portlet.tpst=ae0ed867f9c9a6e86d598c87a909a92c_ws_MX&javax.portlet.prp_ae0ed867f9c9a6e86d598c87a909a92c_viewID=news_view&javax.portlet.prp_ae0ed867f9c9a6e86d598c87a909a92c_newsLang=en&javax.portlet.prp_ae0ed867f9c9a6e86d598c87a909a92c_ndmHsc=v2*A1167656400000*B1218694464000*C1199192399000*DgroupByDate*J2*N1010872&javax.portlet.prp_ae0ed867f9c9a6e86d598c87a909a92c_newsId=20070823005282&beanID=2009756526&viewID=news_view&javax.portlet.begCacheTok=com.vignette.cachetoken&javax.portlet.endCacheTok=com.vignette.cachetoken>.

  Applied Materials Press Release, . " Applied Materials Completes Acquisition of Applied Films." Business Wire. Business Wire, 07 Jul 2007. Web. 13 Mar

2010. <http://www.businesswire.com/portal/site/appliedmaterials/index.jsp?epi-content=GENERIC&newsId=20060707005423&ndmHsc=v2*A1167656400000*B1178676791000*C4102491599000*DgroupByDate*J2*N1002992&newsLang=en&beanID=547561197&viewID=news_view>.

  "Applied Materials, Inc. " Hoover's Company Records  15 March 2010 Hoover's Company Records, ProQuest. Web.  16 Mar. 2010. "Applied Materials opens expanded FPD and solar equipment manufacturing facility in Taiwan. " Telecomworldwire  11 Mar. 2010: ABI/INFORM Trade &

Industry, ProQuest. Web.  21 Mar. 2010.

Datamonitor Semiconductor Equipment Industry Profile: Global; Mar2009, p1, 30p, 13 charts, 9 graphs http://0-search.ebscohost.com.opac.sfsu.edu/login.aspx?direct=true&AuthType=ip,cookie,url,uid&db=buh&AN=37370876&site=ehost-live

  "The Photovoltaic Thin Film Study - Market Overview out Now. " Business Wire  27 June 2008  ProQuest Newsstand, ProQuest. Web.  21 Mar. 2010.   “GE Sees Bright Future for Thin Film Solar Technology; Increasing Investment in Promising Thin Film Photovoltaic Technology; Engaging

Global Resources to Deliver Best-in-Class Product” ENP Newswire 19 march 2010 : http://0-global.factiva.com.opac.sfsu.edu/ga/default.aspx   Anonymous, . "Applied Materials: It's Crystalline Clear the Amorphous Business Isn’t Working." Seeking Alpha16, MAR 2010: n. pag. Web. 23 Mar 2010.

<http://seekingalpha.com/article/193870-applied-materials-it-s-crystalline-clear-the-amorphous-business-isnt-working?source=feed>.   Humphries, Mathew. "Konarka creates transparent solar cells for windows." Geek.com 11 Mar 2010: n. pag. Web. 23 Mar 2010.

<http://www.geek.com/articles/gadgets/konarka-creates-transparent-solar-cells-for-windows-20090511/>.