Archive for April, 2014

News just released after hours from GTAT

MERRIMACK, N.H., April 30, 2014 (GLOBE NEWSWIRE) — GT Advanced Technologies (Nasdaq:GTAT) today announced several new initiatives aimed at expanding its portfolio of sapphire and silicon carbide (SiC) solutions for next generation consumer and industrial products. The company has entered into a memorandum of understanding (“MOU”) with European-based EV Group (“EVG”), a global leader in specialty bonding and material handling equipment, to work together in various collaborative arrangements including jointly developing high volume production processes and equipment necessary to bond the ultra-thin sapphire and SiC lamina, produced by GT’s Hyperion™ technology, to engineered substrates such as glass, silicon, and plastics.

Additionally, GT announced it will begin working with a leading glass substrate producer to develop specially engineered substrate materials that can be bonded to ultra-thin sapphire lamina to create unique composite solutions that expand the reach of sapphire into a broader set of applications.

The company also announced that it has acquired patent-pending technology for producing low-cost, scratch-resistant aluminum oxide coatings for various substrates including glass and plastics. These coatings are expected to provide some of the durability and scratch-resistant properties of crystalline sapphire at a lower price point to address market opportunities where cost is paramount and not all of the properties of sapphire are required.

GT’s business model will be focused on selling the bonding and coating equipment developed through these initiatives.

“Our sapphire composite material development program is focused on leveraging the combined expertise of GT and our technology partners in order to build a new market for low-cost and highly-durable substrate solutions for next generation consumer and industrial products,” said Tom Gutierrez, GT’s president and CEO. “These programs enhance our technology portfolio and leverage our significant investment in our Hyperion technology.”

About EV Group (EVG)

EV Group (EVG) is a leading supplier of equipment and process solutions for the manufacture of semiconductors, microelectromechanical systems (MEMS), compound semiconductors, power devices, and nanotechnology devices. Key products include wafer bonding, thin-wafer processing, lithography/nanoimprint lithography (NIL) and metrology equipment, as well as photoresist coaters, cleaners and inspection systems. Founded in 1980, EV Group services and supports an elaborate network of global customers and partners all over the world. More information about EVG is available at http://www.EVGroup.com.

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· UBS checks indicate that GT shipped some small quantities of sapphire made in its Arizona fab to one of Apple’s partners in China who is in charge of making sapphire covers.

· Given the early success of starting shipments of small amounts of sapphire to China last month, UBS expects GT could raise its full year 2014 sales guidance to the upper end of its $600M-$800M range, with 80%+ still likely from sales of sapphire materials.

· UBS expects 4th and final prepayment will be made in May

· UBS is estimating 100 furnaces were turned on and running. They expect 400-500 sapphire furnaces to be turned on in 1Q14 and 900-1000 in 2Q14

· Sapphire cover screens margins expected to be around 25%

If you follow the Obscure Analyst, you would already know GT turned on 140 furnaces on January 10th, 2014 and UBS checks indicate that the “Quick Start 140” furnaces made their first delivery of sapphire ingot in to one of Apple’s partners in China who will make the sapphire covers. A sapphire ingot is a sapphire that is “cored” out of the boule that will need to be sliced into sapphire screens. UBS indicated that 2,200 kg of sapphire ingots were shipped to China for processing. I am estimating that approximately 100,000 to 115,000 sapphire screens could be produced from 2,200 kg of sapphire ingots. GT’s selling price per screen based on the information provided is falling into the range of $8.50 to $10 per screen.

I am slightly more optimistic than UBS as far as the sapphire furnace ramp up due to the fact that over 1,200 furnaces have been imported and delivered prior to the Mesa, AZ plant prior to March 3rd, 2014. Additionally, my 1,200 furnace count does not include any furnaces from GT that were taken out of equipment inventory in Q4 ($71m worth), or $180m worth of PP&E that was deployed in Q4 2013 (mostly in AZ). I believe that nearly all of the furnaces were ramped up by the end of March based on GT’s ability to ramp over 500 furnaces a month and given that fact that most of the furnaces were delivered between December and February.

Full Disclosure: I am long GTAT and have no plans to buy or sell any holdings

by Matt Margolis

GT Advanced Technologies posted a SAP Functional Lead position on April 10th, 2014 to support its Mesa, AZ sapphire operations.  This position is heavy into SAP (financial system) with experience in materials, production planning, sales and distribution, financial transactions and monitoring operations.  This position also requires “experience with a company experiencing rapid growth”.

The key takeaway here is GT is preparing for a significant pickup in the shipment of sapphire materials and this role is critical to managing a financial transaction that begins with the flow of materials, finished goods, sales, billing and cash receipts.   Additionally, GT is expecting to experience rapid growth of its sapphire operations in AZ, which is a signal that Apple has big plans for GT and sapphire for the foreseeable future.

SAP Materials ManagementSAP MM module as the term suggests manages materials required, processed and produced in enterprises. Different types of procurement processes are managed with this system. Some of the popular sub-components in SAP MM module are vendor master data, consumption based planning, purchasing, inventory management, invoice verification and so on.

SAP Production PlanningSAP PP module is another important module that includes software designed specifically for production planning and management. This module also consists of master data, system configuration and transactions in order to accomplish plan procedure for production. SAP PP module collaborate with master data, sales and operations planning, distribution resource planning, material requirements planning, Kanban, product cost planning and so on while working towards production management in enterprises.

SAP Sales and DistributionSAP SD modules deal in managing all transactions ranging from inquiries, proposals, quotations and pricing and more. The sales and distribution module helps greatly in inventory control and management. SAP SD module consists of master data, system configuration and transactions.  Some of the sub-components of SAP SD module are: master data, sales support, sales, shipping and transportation, billing, credit management, sales information system and so on.

SAP Financial Accounting – SAP FI module deals in managing financial transactions within enterprises. This financial accounting module helps employees to manage data involved in any financial and business transactions in a unified system. This module functions very well for reporting requirements. The SAP FI module is very flexible and is functions well in any type of economic situation. Be it a smaller organization or a larger organization, SAP implementation helps in consolidating data for diverse business transactions and legal requirements. Financial Accounting module helps one to get real-time financial position of an enterprise in the market.

SAP ControllingSAP CO module is another important SAP modules offered to enterprises. The controlling module supports in the process works of planning, reporting and monitoring operations of businesses. It involves methods to view and organize costs that are required for financial reporting. Controlling module enables one to plan, track, perform and report about costs. Controlling includes managing and configuring master data that covers cost elements, cost centers, profit centers, internal orders, and functional area and so on.

SAP Quality Management – SAP QM module helps in management of quality in productions across processes in an organization. This quality management module helps an organization to accelerate their business by adopting a structured and functional way of managing quality in different processes. SAP QM module collaborates in procurement and sales, production, planning, inspection, notification, control, audit management and so on.

Position Summary

GT Advanced Technologies is seeking an experienced and highly motivated SAP Functional Lead with experience with Materials Management to work in the Information Group as a systems support and integrator for an SAP ECC 6.0 installation in our manufacturing operations.  The primary responsibility will to provide SAP Functional Support across the entire areas of our SAP installation with a focus on MM and PP but also SD and FI/CO to a lesser extent. This individual will work as a local liaison to a remote Information Technology team and third party implementation and functional support partner to facilitate the development and management of systems with respect to the SAP ERP/MRP environment.

Required Experience

  • Minimum of 5 years of progressive experience implementing and support SAP Materials Management module, including supply agreements, procurement, inventory management, and receiving in a complex manufacturing environment.  Experience with SAP Fi/Co, PP, QM and SD modules desirable. Experience interfacing SAP with a SAP MES system a plus.
  • Experience working with a Company experiencing rapid growth.
  • High level of integrity and dependability with a strong sense of urgency and results orientation.
  • Strong verbal and written communication, facilitation, and interpersonal skills.
  • Public Company and Sarbanes Oxley experience required.
  • Requires a bachelor’s degree in Computer Science or Business Administration
  • Travel 10% of the time, more as needed

Also, if you haven’t seen a GT job posting it is important to read GT’s core mission statements.  GT is driven by,  “elevating advanced materials and equipment performance to increase capacity, quality and throughput by lowering operating costs”  Additionally, “we have a successful track record of commercializing crystallization growth systems on a global scale to accelerate the ramp of our customers plants to volume production and have decades of experience as an advanced materials provider”.  It is clear that lowering costs, increasing throughput, accelerating plants to volume production and providing material is what GT is good at.

 

Expertise

Our expertise is in crystalline growth technology, process engineering and manufacturing operations. Our world-class team of scientists and engineers has deep-domain experience in elevating advanced materials and equipment performance to increase capacity, quality and throughput while lowering operating costs. We have a successful track record of commercializing crystallization growth systems on a global scale to accelerate the ramp of our customers’ plants to volume production and have decades of experience as an advanced materials supplier.

Excellence

From purchase to product lifecycle support, our operational excellence and service sophistication is unmatched. This means we can respond quickly and efficiently to customers so they can meet their business requirements with confidence and support them as their businesses grow.

 

Full Disclosure: I am long GTAT and have no plans to buy or sell any holdings

As promised here are the latest pictures that were taken April 28th and April 29th of the Apple/GT Advanced sapphire plant located in Mesa, AZ.  The official name of the sapphire operation is “Project Cascade”.  The outside of the building including the crucial power supply to the building including the cooling system looks complete.

 

Steam Above Cooling System 6:30 AM on 4/28

first signs of steam

 

Employee Entrance “GT Advanced Technologies”

employee entrance 2 employee entrance

Solar Arrays outside of Parking Lot

solar arrays and parking solar arrays and parking2

solar arrays and parking3

Employee Parking lot 7:00 AM and 10:30AM local time (looks crowded)

Parking lot 7am  parking lot 1030

Parking lot 7am 2

Electrical Substation

Electrical Substation Electrical Substation3 Electrical Substation2Electrical Substation4

Cooling System on Back End of Electrical Substation

Cooling System Connection to Building cooling system 4 cooling system3 cooling system1 cooling system2

 

Full Disclosure I am long GTAT and have no plans to buy or sell any holdings

 

 

 

 

by Matt Margolis

I reached to for GTAT for comment and the company representative declined to discuss who GT works with on its technology development programs.

Background

GT Advanced Technologies (GTAT) mentioned during the Q4 2013 prepared remarks that its Merlin technology, “comes out of a research operation we established in the Bay Area, over a year ago, to focus on advancing the state of the art in the design and assembly of solar cells and modules”. GT referred to a “research operation,” which immediately set off my alarm that Merlin product was not tested inside a Bay Area PV module warehouse, but instead it came out a R&D facility located in the Bay Area. GT does not have a R&D facility or even an office inside the Bay Area, which only leaves one option; a research lab that is run by a leading PV module maker.

Merlin the Magnificent

Merlin is GT’s solution to improving the downstream solar equipment marketplace. The Merlin PV module offers a drastic improvement over current PV modules in 5 key areas; total system cost, solar cell efficiency, weight, flexibility and durability. GT’s Merlin technology is expected to deliver a total cost reductions of over 10% and cut silver paste use by up to 80%. The drop in silver paste usage as a result of Merlin’s patented design results in a lighter PV module, which may explain Merlin’s improved flexibility over other PV module designs. Additionally, Merlin demonstrated the ability to improve solar cell efficiency by 0.7% as well as significantly improving overall module durability. A solar cell efficiency gain of 0.7% doesn’t sound like much but when most solar cells are hovering around 17% it represents a 4% improvement. GT’s Merlin PV module technology is “agnostic,” and will improve the efficiency of any type of solar cell. GT also informed investors that Merlin would not be sold exclusively to any one potential customer, which opens the door for all PV module makers to enjoy GT’s game changing technology. Images below were taken from GT’s March Technology briefing.

(click to enlarge) (click to enlarge)

GT’s Long Term Relationship with Yingli

If I was to develop a game changing technology with a PV module maker I would not only want to the biggest fish but I would want someone I trust. Someone that I have worked with years! As it turns out Yingli Green Energy (YGE) not only was ranked #1 in 2013 for producing PV modules, but their relationship with GT Advanced Technologies (formerly GT Solar) goes back to 2002, when Yingli became GT’s first customer in China. Also, if you look at the various orders placed over time by Yingli the press releases contain language that translates to “hey scratch my back and I’ll scratch your back.” If you don’t believe me, read these comments between GT and Yingli’s within this order announcement from 2010 to that is focused on celebrating GT Solar’s 1000th DSS450 Crystalline Ingot Growth Furnace shipment as well as the very close relationship between the companies.

GT Solar International, Inc. (NASDAQ: SOLR), announced that it has achieved the milestone shipment of its 1,000th DSS450TM crystalline ingot growth furnace. The recipient of the system is long-time Chinese customer Yingli Green Energy Holding Company Limited.

 

GT Solar is a trusted and valued partner for Yingli,” said Mr. Liansheng Miao, chairman and chief executive officer of Yingli Green Energy. “Their ingot growth furnaces consistently produce high quality material which helps to reinforce our company’s reputation for delivering reliable products to our customers.

We are pleased that Yingli continues to express confidence in our ingot growth technology,” said Tom Gutierrez, president and chief executive officer of GT Solar.

Yingli Green Energy became GT Solar’s first customer in China in 2002 when they set up the first ingot, wafer and cell production lines at their Baoding headquarters. These production lines launched Yingli into the PV manufacturing industry and today they are one of the world’s leading fully vertically integrated PV manufacturers. Yingli has continued to invest in GT Solar’s multicrystalline ingot growth furnaces including the DSS240, which was introduced in 2003, and the current DSS450, which was introduced in 2007. Today, GT Solar has shipped over 1300 crystalline growth furnaces to customers around the world.

It’s very clear that Yingli and GT have a mutually beneficial relationship and both companies have admiration and appreciation of the benefits that have resulted from their long partnership. GT has enabled Yingli to continue to be a leader in the PV module space while Yingli’s investment in GT equipment has allowed GT to expand its business and invest money in its R&D to support the next generation of equipment that will benefit Yingli even more.

GT typically goes after strategic deals with the best and the biggest companies in their target market (i.e. Apple for sapphire), so it only makes sense that GT would reach out and try to work with one of the top 3 PV module makers in the world. According to Solarbuzz 2013 rankings the top 3 PV module makers were

  1. Yingli Green Energy
  2. Trina Solar
  3. Sharp Solar

So far I have focused on GT’s Q4 prepared remarks that indicated GT’s patented Merlin technology came out of a research operation in the Bay Area over a year ago. Secondly, I dug into GT’s closest and longest relationship with a PV module maker by the name of Yingli, that was consummated in 2002. Lastly, I provided 2013 Solarbuzz rankings of the top 10 PV module makers and focused on the top 3, which included Yingli. The only item that is missing to connect the dots is a R&D facility that is run by a leading PV module maker inside the Bay Area. As it turns out, Yingli opened up a Bay Area R&D facility in 2011 with the primary focus of accelerating their understanding of module performance and reliability. Yingli’s R&D facility located in the Bay Area is the perfect facility for GT to battle test its Merlin technology and truly understand how Merlin stacks up against the competition.

Yingli Opens up a Bay Area R&D Facility in 2011

Yingli announced on July 12, 2011 that the company was opening up a R&D facility in the San Francisco Bay Area for comprehensive product testing and evaluation. Furthermore, the announcement indicates that the new research and development lab will accelerate the company’s understanding of module performance and reliability. Additionally, R&D facility lab will allow Yingli to evaluate new technologies and deliver next generation products.

Yingli Americas also announces the opening of a new research and development facility in South San Francisco for comprehensive product testing and evaluation.

“Our new research and development lab will accelerate our understanding of module performance and reliability,” said Brian Grenko, Director of Operations for Yingli Americas. “This investment will enable us to more quickly evaluate new technologies, deliver next generation products, and better serve our customers throughout all stages of a project’s life cycle.”

“We now have the ability to offer product testing and development support within the U.S. for our customers here,” added Mr. Petrina. “We plan to use this new facility to proactively address market opportunities and trends to better support our pre- and post-sales efforts – a sign of our continued dedication to technical leadership.”

Image from Yingli

(click to enlarge)

Image from Yingli

Additional Images of Yingli’s PVTL obtained from Greentechmedia

Conclusion

GT mentioned that Merlin came out of a research operation that was established over a year ago. I was able to retrieve a copy of GTAT’s “Investing in Continued Growth and Diversification” presentation, that was discussed in August 2012 during Canaccord Genuity Growth Conference (image below). GT’s 2012 presentation clearly indicates its intentions of heading downstream and venturing into Module Manufacturing. The August 2012 presentation states GT is, “considering opportunities to move downstream solar equipment market to support next generation solar cell and module manufacturing.” As it turns out, it took GT less than 2 years to introduce Merlin as an opportunity and then bring it to the market. GT’s module manufacturing opportunity, which officially was introduced as “Merlin” technology, is referenced in the second bullet point in the image below.

(click to enlarge)

I’ve established clear evidence that GT’s Merlin PV module technology fits like a “T” within the primary scope of Yingli’s Bay Area PV Testing Lab’s that was established over 2 years ago in 2011. The contract announcement in 2010 between GT Solar (renamed to GT Advanced Technologies) clearly exhibits the co-dependencies, trust as well as a high level of engagement between both companies. Additionally, Yingli has been ranked near the top of the PV module supplier charts for the last several years. I believe Yingli is the “unnamed” collaborative resource, that helped GT battle test and monitor the results of GT’s game-changing Merlin technology within their Bay Area research operation, that opened its doors in 2011.

According to the market research firm IHS, Yingli claimed the #1 spot again in 2013 as the biggest PV module supplier, increasing the company’s market share from 7.4% (2012) to 8.3% in 2013. Solarbuzz reported that the top 2 PV module suppliers (Yingli and Trina Solar (TSL) accounted for 15% of PV module shipments in Q4 2013. Trina Solar is also long term customer of GT and has placed over $70m of solar equipment orders with GT since 2008. Trina Solar placed a $49m Polysilicon reactor order in 2008 and a DSS equipment order totaling $24m in 2010.

GT indicated that Merlin could generate $1B a year in annual sales based on a 20% market adoption rate by 2018. Yingli and Trina Solar have a combined PV module market share of 15% as of Q4 2013. GT likely “battle tested” Merlin at Yingli’s R&D facility in the San Francisco Bay Area and Trina Solar has been a long time GT solar equipment customer since 2008 or earlier.  GT is well positioned to sell Merlin to the top 2 PV module suppliers in the world and drive Merlin’s market adoption rate above 15% and generate over $800m of annual revenue from with just two customers much sooner than previously expected.

(click to enlarge)

GT’s CEO Tom Gutierrez indicated during the March technology briefing that, “we don’t build the trap and wait for the mice, we work directly with the customer to find out what they want”. I just hope GT has enough cheese to feed all the mice that will come crawling through the door for a bite of GT’s Merlin technology. Furthermore, it wouldn’t surprise me in the least, if Yingli and GTAT celebrate their long tenured relationship and continued partnership within Merlin’s inaugural order announcement in the 2H of 2014.

 

by Matt Margolis

Yingli Green Energy reported their Q4 2013 earnings on March 18th.  I wanted to take a closer look at their conference call to understand their solar industry outlook as well as to try to find Merlin.  No I am not talking about “where is Waldo” but where is GTAT’s Merlin technology headed?  GT’s CEO Tom Gutierrez did mention that Merlin would most likely not be named by the PV module makers but that we would be able to recognize Merlin if we saw it.  So my question is, where is Merlin?

 

Yingli Raises $83m of Cash for China Power Plants

Yingli announced plans on Friday to raise $83m via a secondary share offering.  The company indicates that the funds will be used to build solar power plants in China. The shares were offered 17% below Yingli’s closing share price on Thursday and the stock traded down nearly 13% on Friday.

 

Yingli’s Solar Industry Outlook

Looking ahead, we’re optimistic on the state of the solar industry in the U.S., Latin America and the overall region. 2014 is picking up where 2013 left off, demand is strong in our book of businesses filled and well-balanced. The momentum we are witnessing we will be enduring and we believe that we are just getting started in what will be a tremendous end market for years to come. We are confident that with cooperation and support of our customers and other key stakeholders, we will navigate the uncertainty of this new trade petition and soon be able to focus on our key mission, which is drive adoption of solar energy across the continent and the world. (Seeking Alpha)

 

Next Generation PANDA series modules: Bigger, Lighter & Highly Efficient

In 2014, we expect to mass produce a variety of new generation of other PANDA series modules, bigger but lighter weighted and high-efficiency. our proprietary goal is to create differentiated products that provide more value for our customers and accelerated the deployment of solar across the world.

A bigger PV module that weighs less than a smaller module is usually an oxymoron.  GT’s Merlin technology, which removes up to 80% of the silver paste from the traditional PV module design would certainly reduce the weight even if the PV module supplier increased the size of the unit.

 

Is Yingli’s next generation of PANDA series modules, that have been described as being; bigger, lighter, highly efficient and expected to be mass-produced in 2014 the first sign of Marlin?

Merlin Timeline

 

Full Disclosure: I am long GTAT and have no plans to buy or sell any holdings

 

 

 

 

by Matt Magolis

Yesterday, I highlighted Apple’s mutli-touch sensor patterns and stackup patent that was issued on April 24th, 2014.  The newly issued patent claims indicate that Apple has put in some significant time and effort focused on improving the functionality of their multi-touch sensor patterns that will improve the user’s overall experience while handling a device with a curved screen. The number of individual claims has decreased from 39 to 14, however the precision of their 2014 claims versus the 2009 claims is astounding.  This newly issued patent might indicate Apple is very close to introducing a curved iPhone screen in the not to distant future.

Today, I wanted to share a few Apple job postings I found that indicate Apple’s focus on the “Human Interface” on Apple’s next-generation devices, which include the iPhone, iPad and Mac (iWatch not listed but we know it exists).  Apple is looking to create a completely new user experience that will that will further connect mankind to their portable electronic devices.

The first job postings goes back to January 5th, 2014 when Apple was recruiting for a Multitouch Sensor Algorithms Engineer.  The job focusing on gesture recognition, which is technology (Software) that typically allows humans to communicate with machines (Equipment) without any mechanical devices.  For example you could simply point you finger at the screen and the cursor would move.  The Multitouch Sensor Algorithms Engineer job description is below:

Be part of the engineering team creating next-generation input devices and displays. We are looking for a Gesture or Pattern Recognition Algorithms Engineer with working knowledge of gesture recognition, statistical signal processing and pattern recognition along with strong programming skills.

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Apple posted a position for a HID Multitouch Sensor Algorithm Manager on March 7th, 2014.  The position is focused on the “next-generation Human Interface Devices for iPhone, iPad, and Mac.”  The position will focus on creating “insanely great” sensing experience and focus on “groundbreaking sensing technologies”.  You can take my word that Apple is developing mankind’s “6th sense” and it appears Apple is going to take the human-being user experience to another dimension across Apple’s next-generation of devices.

Come lead a team of creative, energetic, and enthusiastic algorithm engineers responsible for next-generation Human Interface Devices for iPhone, iPad, and Mac. We are looking for talented individuals who enjoy creating pattern recognition and statistical signal processing algorithms, prototyping concepts, investigating new technologies, and ultimately delivering high-quality products. In this role, you will be at the focal point of many cross-functional interactions with the hardware, software, QA, industrial and UI design teams.

Lead the team responsible for developing “insanely great” sensing experiences for Apple products.
Spearhead the development and integration of new technologies from proof of concept phase through production ramp.
Invent algorithm architectures for groundbreaking sensing technologies.
Focus the team on parsimonious methods to achieve fluid customer experience.
Identify, create and document new sensing system metrics and specifications that deliver performance that matter to customer perception.
Simulate sensing system performance and error sensitivities.
Diagnose engineering issues with true scientific method, driving to definitive root cause, in close collaboration with cross-functional team members.

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A photo taken today and shared with me an hour ago clearly indicates steam is coming out near the cooling systems by the electrical substation. Eye witness account indicated that the parking lot was very full overnight and a flock of employees arrived at 6am for work this morning. The eye witness also counted 21 sets of 3 phase electrical lines powering the facility.

This is the best evidence yet that the Mesa Sapphire facility is “full steam ahead” and is up and running and producing sapphire around the clock.

I had previously indicated that the Mesa sapphire plant was likely operating at or near full capacity by the end of March, just weeks after being granted approval to being full operations on 3/19/14 by the Federal Trade Zone (FTZ).

I will have additional images to share later.

Full Disclosure: I am long GTAT and have no plans to buy or sell any holdings.