Veeco drops CIGS solar systems biz

Veeco saw “solid” Q2 revenues in LED & Solar ($219 million, $206 million of which was MOCVD sales), but has decided to exit the copper indium gallium selenide (CIGS) thin film solar cell fab equipment sector.

August 1, 2011 — Veeco saw “solid” 2Q revenues in LED & solar ($219 million, $206 million of which was MOCVD sales), but has decided to exit the copper indium gallium selenide (CIGS) thin-film solar cell fab equipment sector, reported John R. Peeler, Veeco CEO.

Peeler cited “the improved performance of mainstream solar technologies” and rapidly declining costs, coinciding with lower-than-expected CIGS market acceptance. Veeco decided that “the timeframe and cost to successful commercialization” were not within Veeco’s roadmap. The company says it will continue to supply CIGS components, and be a top supplier of MOCVD and MBE tools for CPV.

Veeco will transfer its R&D facility, pilot line, technology and key personnel in Clifton Park, New York (acquired in July 2009 from DayStar Technologies) to the College of Nanoscale Science and Engineering (CNSE) supporting their planned CNSE/SEMATECH Photovoltaic Manufacturing Consortium (PVMC).

Veeco’s 2Q11 GAAP results were negatively impacted by approximately $51 million in asset impairment and restructuring charges related to this business. In addition, approximately $20 million in CIGS deposition systems has been removed from Veeco’s backlog. In 3Q11 Veeco will treat its CIGS Solar Systems business, which operated at a loss, as a discontinued operation. Peeler added, “The closure of our CIGS Systems business is expected to have an immediate and positive impact to Veeco’s profitability.” Veeco will continue to sell CIGS deposition components and remains a supplier of MOCVD and MBE tools to the concentrator photovoltaic (CPV) market.

Analysts’ take

Veeco’s exit from CIGS illustrates a couple of challenges facing the sector, as it tries to better position itself against traditional and entrenched c-Si solar PV:

c-Si’s been surprisingly resilient. “The magnitude of the cost reductions achieved in c-Si PV manufacturing has surprised a lot of people,” and it’s become difficult for thin-film PV manufacturers (aside from CdTe leader First Solar) to compete, explains Gartner analyst James Hines. (Note much of that c-Si pace can be attributed to the rapid decline in silicon prices.) “Five years ago, thin-film PV was going to take over the world, but the competitive landscape is much different today” — just ask AMAT about its SunFab line, he says.

CIGS will compete… in time. VECO didn’t say the CIGS technology wasn’t viable, just that it wasn’t going to pan out in an acceptable timeframe for the company. “Nobody’s expecting to be competitive tomorrow,” pointed out Matt Feinstein, research associate at Lux Research.

The real question is what CIGS needs to achieve to be competitive with established c-Si — and it comes down to beating c-Si on price and close enough in performance. Feinstein says CIGS makers are getting into the low teens efficiency (13%-14% top-end), vs. the high-teens and even 20%+ being seen in c-Si. Cost-wise, “CIGS makers think at scale they can hit $0.50-$0.60/W, and they can make some nice margins competing there,” he says (FSLR’s now in the $0.70 range with CdTe).

Scaling’s the key. What has to happen first and foremost is not just getting familiar with the technology and getting it to work — it’s scaling up the technology to manufacturing volumes with low costs. There are plenty of firms in the CIGS race (e.g. Miasole, Stion, Solibro, AQT, Advansys, some in China), and the frontrunners are pushing hard to refine processes and make things more cost-effective, often with help from manufacturing partnerships (Stion has TSMC, Miasole has Intel). Figuring out how to build CIGS technology is one thing, but building a lot of it cheaply “is a different game,” Feinstein noted. “Most companies are in the process of ramping, getting to production-scale equipment.”

Another reason scaling is key: bankability. Tier 1 makers have a lot more clout than smaller PV suppliers, who are getting the blame for the current flood of capacity that is punishing the market. “Bankability concerns, both for new technologies and for vendors, has created an additional headwind for CIGS manufacturers, especially startup companies,” Hines says. Once you can prove your technology can scale in manufacturing in both high volumes and lower costs, then you have a whole new level of play with suppliers and financial backing (either private or public). c-Si makers have that; thin-film, outside FSLR, largely doesn’t.

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