The polysilicon market environment has also continued to improve, with supply tightening up considerably and prices rising. This has opened up solid opportunities for a company like GT Advanced Technologies (GTAT, Financial), which seems set to improve at a great pace. Let's take a look at GT's prospects and see how it might do in the long run.
The prospects
Although the pricing environment has improved, the number of producers who could operate profitably at these price levels remains limited. This places GT in a comfortable position against its competitors being an established brand. Further, GT remains focused on driving the need for new expansion projects to meet future demand looking at the increasing end market demand, and a shortage of polysilicon beginning in the 2015 time frame.
GT is well-positioned as the industry's polysilicon technology leader to compete for the new expansion in cost reduction projects that are likely to proceed. This confidence is backed by the fact that its next generation SDR1K reactor, which targets a significant improvement and output, and lower energy consumption than its SDR 600, is now commercially available.
GT’s recent win with Cosmos demonstrates its competitiveness in this marketplace.
GT’s HiCz solution is now commercially available, and its revolutionary Merlin solar interconnect technology has been well received.
The company has a strategic framework that drives its investment decision process. GT’s polysilicon and PV equipment offerings have led the market to a higher productivity and lower costs.
Solid growth in the future
The solar market is perched for significant long-term growth, and GT remains committed as a provider of market-leading technology, its PV and poly businesses have proven to be quite cyclical and prone to extended downturns. GT relied on a strategy to diversify and expand the business beyond its solar roots in order to drive further growth. It applied three dimensions store growth and diversification strategy, first, pure diversification into new high-growth markets where its researchers identify supply bottlenecks, cost challenges, the technologies issues impairing growth. GT focuses on opportunities where it can add value by leveraging its core competencies in crystal growth, advanced materials, supply chain management, and manufacturing.
GT’s acquisition of Crystal Systems in 2010 added the ASF sapphire growth system to its portfolio, moved GT into the LED and industrial sapphire markets. Once established in the LED and industrial markets as a producer of advanced sapphire growth technology, it has driven significant cost reduction in the industry, enabling the expansion of the application space into the high – volume consumer electronics market.
Last year, it expanded its portfolio further into the Power Electronics space by introducing an internally developed silicon carbide growth technology. Further, its growth strategy is based on the premise, the depth or breadth of footprint in each served industry essential for its stability.
Therefore, GT has looked to expand its footprint by moving deeper into the markets in which it operates. It has achieved these both organically and through the acquisition of technology that it subsequently developed. It has expanded its solar equipment solution portfolio with the addition of its HiCz product line, next generation polysilicon reactors, and FBR – based TCS production offerings.
GT added automated sapphire inspection tools to its sapphire portfolio, and positions itself to enter the downstream LED manufacturing process with the introduction of its HVPE and PVD tool set.
Solid acquisitions
The recent acquisition of the advanced thermal processing solutions from Thermal Technologies has expanded its presence in the industrial market sectors that it serves. Hyperion, a unique ion implanter, targeted to deliver thin, low-cost substrates, has application across all of its served markets and the recently announced initiatives to add complementary bonding and coating solutions, further expands its position in these served markets.
The addition of materials businesses adds recurring revenue streams for GT, and further expands its market opportunity. It has expanded Sapphire Materials business, notably the project with Apple, and its recently announced Merlin materials business.
These new product initiatives provide GT with several billion dollars of incremental annual market opportunities. It expects to grow with its existing customer base, while adding new customers and diversifying the geographies in which it operates. Finally, the objective is to grow shareholder value by expanding the size and breadth of the business in order to drive increased profitability.
GT is also working with a leading glass substrate producer who develops specialty engineered materials that can be bonded the ultra – thin sapphire lamina to create unique sapphire glass solutions. This work is expected to further expand the reach of sapphire to broader set of applications.
GT recently acquired technology for producing low-cost, scratch resistant 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.
Conclusion
GT Advanced Technologies is in a great position to profit from several angles. So, investors should take a closer look at the company as it can be a long-term outperformer.
