Amtech Business Hit By China Policy Changes

PV Production Equipment Maker Amtech Group Goes In For Restructuring Of Its Solar Business As Manufacturers Push Back Solar Cell Expansion Plans Following Domestic PV Policy Changes In China
02:56 AM (Beijing Time) - 13. August 2018
amtech

Solar business sales have strongly slowed down in the first two quarters of calendar year 2018 (for Amtech that is FY Q2/2018 and Q3/2018.)

Key Takeaways

  • Amtech Systems will implement restructuring plan for its solar business to deal with the slump created by China’s domestic policy changes
  • It will reduce its workforce for the solar business by 35 to 40 employees; it plans to save $3 million on an annualized basis
  • Solar business contributed $14.1 million to total revenues in its fiscal Q3/2018 (April-June 2018), as it slowed down business with lower shipments of solar equipment
  • At the end of June 2018, total order backlog for Amtech was $41.2 million, with solar’s share being $19.0 million

Arizona, US based global manufacturer of PV Production equipment Amtech Systems has announced a restructuring plan to deal with the implications of China’s domestic solar policy changes. Solar cell capacity expansion plans have slowed down with Beijing’s 5/31 solar subsidy announcement.

With its restructuring plan, Amtech says it wants to bring down operating costs by approximately $3 million on an annualized basis. Solar business workforce will be trimmed by about 35 to 40 employees, to ‘better align the workforce with the current needs’ of the business and improve competitiveness, the management explained. During Q4/2018 (July to Sept. 2018), it expects to report $0.6 million to $0.8 million of related costs.

“However, we believe follow-on orders for the next phases of the large 1 GW+ turnkey project will be received in the next few quarters and look to participate in other selective growth opportunities as we serve core customers over the long term,” said CEO Fokko Pentinga.

Amtech shipped phase 1 and 2 of a turnkey order, each 250 MW, with an unidentified Asian customer for cell production equipment. While phase I is starting production of this 1 GW project, “Amtech expects phase 3 to be booked in the next few quarters, which is subtle shift in tone from ‘months’ on the prior call,” emphasized Jeffrey Osborne from investment bank Cowen in a company note post the analysts call. “We are assuming orders flow through in the March 2019 quarter (vs. September 2018 prior) and the ramp of solar revenue will commence in the following quarter and through the following fiscal year,” he said.

Amtech Group includes among others Dutch companies Tempress and Solaytec, which sell PECVD diffusion tools and ALD tools, respectively. Its French subsidiary R2D Automation offers wafer automation and handling equipment for the solar and semiconductor industry, including solar cell transfer systems, sorters, and ID readers.

Amtech Group’s total revenue in Q3/2018 ending June 30, 2018, was $41.2 million, down from $32.8 million reported last quarter and $47.8 million during Q3/2017. Increase in sequential revenues was due to Amtech’s semiconductor equipment business doing well. Lower shipments of solar equipment was a major reason for decrease in net revenues on YoY basis. During Q3/2018, solar contributed $14.1 million to total revenues.

To the combined net revenues of $147.6 million for first nine months of fiscal year 2018, Amtech says solar contributed $75.9 million. At the end of June 2018, Amech’s total order backlog was $41.2 million, with solar’s share reaching $19.0 million. A quarter back, total order backlog stood at $63.1 million. This number does not include $5.8 million of solar customer orders that are not expected to ship in the next year.

Amtech expects to have revenues in the range of $26 to $28 million in its last quarter of 2018 that will end on September 30, 2018. Restructuring costs will impact the operating margin that’s expected to be in negative.

Still Cowen is optimistic on capex spending of solar cell manufacturers in the coming years. “We see a solar capital spending cycle in the quarters and years ahead as demand accelerates across multiple geographies. As the market for solar shifts to more distributed generation instead of central utility scale, we expect a greater emphasis on higher efficiency cells which positions Amtech well, given its new product offerings,” said Cowen’s Osborne.

 

Anu Bhambhani

Anu Bhambhani is the News Editor of TaiyangNews

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Anu Bhambhani