India to see next wave of solar cell production: Expert

Michael Splinter, President and CEO of Applied Materials is looking at India as the next stop for chip manufacturing. In a CNBC-TV18's special show Forbes India, Splinter said, "I think there are real possibilities in India to see next wave of solar cell manufacturing. New technologies as well as, utilizing existing technology to satisfy the solar mission here in India is a tremendous opportunity to create jobs in manufacturing."

Splinter is a 30-year veteran of the semiconductor industry and has led Applied Materials to record revenue and profits during his tenure. Under his leadership, the company is helping drive global adoption of solar power by enabling a true inflection point in the cost-per-watt of solar energy.

Here is a verbatim transcript of his comments. Also watch the accompanying video.

Q: What brings you to India at this point in time. Applied Materials is looking at expanding in countries like China, Taiwan, South-East Asia and Korea because that is where your customers are setting up their new factories, so where does India figure in your scheme of things?

A: India has been a very large engineering and R&D centre for us for the last five-ten years. We have been growing our site primarily in Bangalore but we have three other sites around the country. It is very exciting possibility of what is going to happen here for future innovation in our fields; semi conductors and solar and display there. Every one of these areas needs new capabilities and new materials. So this is opportunity to work with some of the most innovative scientists in the world.

Q: You talked about opportunities within the chips space in India and while this has been something that the government has been trying to sort of bring investments into, we haven't seen significant investments coming in as far as chip making facilities are concerned. We had a policy in 2007 which announced some sops, we are now expecting a revised policy which will pretty much bring in same sort of sops that we saw in 2007. There has been all sorts of estimate of USD 8-12 that is the size of the market that has been estimated for the chip business in India by 2012, how confident and optimistic are you about the chip market in India?

A: Chip market in India is going to continue to expand and I think those numbers are quite good estimates of what is happening. Consumer electronics are becoming more popular here as the economy expands. But as far as chip manufacturing really around the world, this area has been consolidating for some time. I think there are real possibilities in India to see next wave of solar cell manufacturing. New technologies as well as, utilizing existing technology to satisfy the solar mission here in India is a tremendous opportunity to create jobs in manufacturing, really in the whole eco system of solar deployment as the mission reaches its pinnacle 20 Gega Watts over the next 10 years or so.

Q: You spoke about solar mission in India, what is that going to actually mean for Applied Materials because we have got various state governments actually putting forward plans to attract investments into this space. We have got a lot of Indian companies currently making inroads into the photovoltaic space, how do you see this business panning out for Applied Materials in India?

A: We already have a number of customers inside India, so the growth in solar photovoltaic in India will be very good for Applied Materials. It will be good for Applied Materials whether those are companies that are created and developed here in India or whether they are international companies. But our fundamental preference is to see the industry in India grow substantially and grow from the core companies that are here today as well as new innovators and entrepreneurs that are willing to create new companies and new technologies for solar photovoltaic.

Q: So what can we really expect then from Applied Materials in terms of investments into India, how much have you already invested and what is the kind of investment plan that you have charted out now over the next three to five years?

A: Today we have 1200 employees here in India in our four sites that has been growing by about 10% a year for the last several years. I see it continuing to grow at average or faster. We have great engineers here, great software capability, and great relationships with universities like IIT Bombay. These are the kind of fundamentals that we need to continue to grow and then the third aspect is will this solar industry grow fast here, intrinsic industry or manufacturing space grow fast here. If that really happens quickly we will be able to expand even faster than roughly 10% a year.

Q: Let me just ask you about global solar industry because post 2008 we saw significant slowdown as far as the solar industry was concerned. There was a glut, so to speak in the market as well. Have things turned around significantly from there and what's the future looking like as far as the global solar business is concerned over the next 12 months?

A: The solar industry is growing very fast today. Last year almost 17 GW got deployed around the world, primarily in Europe but inside of that more than half of that was in Germany and Italy. This year we see that something like 20-25 GW is going to be deployed on a worldwide basis. Again most of that will be in Europe but countries like India, China, and United States are all growing substantially in their deployment of solar. Each of those countries should be 80 GW or may be even a little bit more during 2011, if we have a very strong year but solar is growing rapidly. Deployment to manufacturing is growing rapidly and I think as the world continues to look for clean sources of generation, distributed sources of generation, solar is going to become more prevalent as the cost comes down.

Q: Since we are talking about energy and the way that the governments are going to approach the energy problem going forward? Given what's happened in Japan, do you think that the nuclear power business is going to be temporarily hit or do you think this is going to be a long term setback that the nuclear power business is going to face? Are we now going to see governments fast forwarding their plans with regards to solar or wind?

A: I believe what's going to happen as outcome of the difficulties that have occurred in the Japan nuclear site is that people will take a step back and look at how their nuclear plans, how safe they are? Do they have the latest precautions? But the world needs nuclear energy. It is a clean source of energy and while there may be a pause, I don't think that there can be a slowdown or a stoppage of the need to proliferate. However I do think that it will create more impetus for renewable forma of energy like Solar. This is one of those energies that uses the sun and is infinitely renewable over a period of time. So I think that the percentage of Solar will go up because of this but we are not going to stop the nuclear power proliferation. We have looked at now our supply chain. Our supply chain in Japan is secure, so we can deliver our products to our various customers around the world. Our customers inside of Japan, some of them have had damage to their factories. We have mustered people from around the region to go to Japan to help out those customers, get their factories going again, this is critically important not just for applied materials, not just for the customers but for the industry as a whole to ensure that the overall supply chain in the industry continues to be healthy and continues to move.

Q: How do you see this impacting growth for your business? Not just the applied materials but for the industry atleast in the near term?

A: We are hopeful that we are going to avoid any disruption in the supply chain. There is inventory in these areas. There are manufacturers, other manufacturers around the world that can fill in some of the needed capacity. Right now we believe that we are going to avoid shortages but we really wont be able to see it specifically until sometime late in May. So we will be watching this situation very carefully. We aren't concerned about the display industry, factories that make flat panel TVs inside of Japan, where consumer spending as you can imagine during this crisis has dropped off quite a bit. That's an area we are also keeping our eye on as we go forward in time here.

Q: You are also a part of the US-India CEO forum. One of the issues that is often been spoken about is the infrastructure deficits in India. From US point of view, what are the other issues that US CEO's seem to be concerned about while doing business in India?

A: What India and US collaboration is about working on various industry areas to ensure that we can work together in a seamless fashion. Infrastructure is obviously one of those where you can move products in and out seamlessly in and out of the US, and in and out of India. This is where the industrial infrastructure comes in.