KLA-Tencor Follows Chips-To-Solar Move (KLAC, FSLR, WFR, AMAT)

As long as silicon chips continue to pack more power into less space, the industry will need improved inspection devices to assist with quality control. Or at least that’s what KLA-Tencor Corporation (NASDAQ:KLAC) is counting on.  And now it appears that KLA expects solar and photovoltaic to be a new engine of growth.

The company revealed a new inspection device today that offers “optical in-line dual sided inspection of photovoltaic (PV) wafers and cells.” At any other time, such a device would stand a good chance of being an instant success.  However, given today’s economic troubles and the reluctance of many solar cell makers to spend on capital equipment, the new device could be in for a rough ride.

First Solar Inc. (NASDAQ:FSLR) is facing a short-term outlook that “has never looked more difficult,” according to its CEO. MEMC Electronic Materials, Inc. (NYSE:WFR) projected a first quarter 2009 revenue drop of as much as 50% from the fourth quarter of 2008. Applied Materials Inc. (NASDAQ: AMAT) last month essentially said its former up-and-coming  growth engine of solar operations was going to be dark for new orders this year.

Neither of these statements bodes well for a new, high-priced piece of capital equipment, no matter how good it is.  Still, KLA-Tencor shares are up about 3% at $16.50 this morning.

Paul Ausick
March 4, 2009