Amtech Systems: Powering into Solar’s Future

In recent years, the boom in solar energy has given birth to a global industry brimming with potential.

But the combined effect of a crippling economic crisis, which has weakened demand for components and squeezed credit markets, and billions of dollars being pumped into expansion, resulting in an oversupply of everything from raw materials to completed panels, has hit the sector hard.

Even as the market struggles, Amtech Systems Inc. (NASDAQ:ASYS), a Tempe, Arizona-based international supplier of systems, equipment and components used in the manufacture of photovoltaic solar cells, semiconductor devices and solar wafers, is pushing ahead with plans to increase its market share. Amtech's more than three decades of semiconductor manufacturing industry experience is an ideal compliment to its solar cells parts segment since both businesses are closely tied to the polysilicon market.

Worldwide semiconductor sales fell 2.8% in 2008 to $255 billion from $257.1 billion in 2007, the first annual drop in the industry since 2001, according to the Semiconductor Industry Association. And the World Semiconductor Trade Statistics (WSTS) expects another 2.2% dip in sales in 2009. But in the Asia-Pacific region, a place in which Amtech does business, semiconductor sales recently soared to record levels and the solar energy industry is growing exponentially.

In the most recent quarter, Amtech recorded a loss of just over $2 million, or 22 cents a share, compared with a $161,000 profit in the same quarter last year, largely due to a  $1.7 million charge related to its semiconductor-dependent subsidiary Bruce Technologies. Revenues also fell to $10.9 million, from $17.6 million in the year-ago quarter.

On the flip side, there has been some positive news. Amtech's solar subsidiary, Tempress Systems, Inc., received follow-on orders worth about $3 million for its diffusion processing systems from two new Asian customers. And the company is planning to launch three new products later this year, part of a growth plan to ensure it remains a significant player throughout the current down cycle and beyond.

All indications point to Amtech's continued growth and penetration into domestic and global markets as government incentives, falling production costs, an infusion of capital, an expanding retail channel, and rising energy prices continue to drive long-term solar demand.

Clouds may currently loom over the industry, but when the skies clear and solar power heats up again, Amtech is sure to be in the thick of things.