|Hi Spekulatius - My strategy for AMAT is to slowly build my position over the next 6 months and I wanted to start a position before year end to take advantage of any tax loss selling. |
With the run up in a lot of these solar development companies, there is rapid speculation and it is difficult to pick a winner especially at a value price. This is a 3-5 year play so I wanted to make sure I had at least some seed money planted in this emerging sector.
As I stated in my earlier post AMAT seemed like a good value oriented play that allowed some long term participation in this sector, specifically the equipment manufacturing.
I also own Corning Inc. (GLW) which is a play in Polycrystalline Silicon (polysilicon) a major material component in photovoltaic solar cells. They own a 32% interest in Hemlock Semiconductor which is a major manufacturer of polysilicon. Management recently approved a $1 billion expansion in May that will double the site's silicon output to 36,000 metric tons by 2010.
Currently at Hemlock Semiconductor about 60 percent of the company's silicon goes into the electronics market and 40 percent is sold to the solar panel market. The electronics market continues to grow at about 10 percent annually, but the solar panel market is growing between 35 to 40 percent per year.
Spot prices for polysilicon are approaching $400 per kilogram. Hemlock will be increasing their production in early 2008 by about 4,500 metric tons (30% increase to 16,000 metric tons) and by 2010 they should be able to manufacture 32,000 metric tons. According to management, their 2008 production is already pre-sold.
It looks like the solar business is beginning to take traction and by 2010 should be in a new long term growth market especially if oil stays above $100. Both AMAT and GLW seem like good value investments that should participate in the potential long term growth of this emerging sector.