NEW YORK (
) -- Solar equipment company
has had its second success in breaking into the market for LED market raw material production, selling a sapphire furnace to South Korean polysilicon giant OCI.
The solar industry is expected to experience a year of slowing growth in 2011, and while equipment makers like GT Solar are viewed by many as defensive plays for a period of uncertainty, it's a positive that GT Solar is having initial success in the LED market, and with a major customer, demonstrating the cross-selling potential.
The GT Solar order with OCI is for $33.3 million. The order will be included in GT Solar's backlog for its current fiscal fourth quarter 2011, which ends on April 2, 2011.
GT Solar purchased a sapphire crystallization business last year as a way to offset the cyclicality in its solar equipment business. It nabbed its first sapphire market deal in December with two Chinese customers for $84 million.
The LED/semiconductor market has its own supply/demand dynamic, distinct for the swings in solar equipment ordering. It's a strategy that has played out from the other LED market side of the supply/demand equation as well, with LED market leader
In fact, GT Solar's CEO Thomas Guttierez recently joined the board of directors of Veeco.
Between the dealmaking from both Veeco and GT Solar, and the fact that OCI, a major polysilicon supplier, is entering into the production of LED market raw materials, the cross currents between solar and the LED space are growing.
Stifel noted in a research note on Thursday morning that GCL, another major customer of GT Solar for solar equipment, is entering the sapphire substrate market as well and "we would expect an order for FY2012 delivery," the Stifel analyst wrote.
LED market leader
reported results this week that showed an inventory correction in the LED market, specific to a slower-than-expected adoption of street lamp LED technology by China. However, a better read on conditions in the sapphire market specifically will come when
, a main player in the production of the sapphire substrate that serves as a core raw material in LED production, reports on Feb. 16.
"We see GT Solar as well positioned to capture share in this growth market, especially as new entrants outside of the historic incumbents such as Sapphire Technologies, Rubicon, Kyocera and Namiki, expand capacity," Stifel analyst Jeff Osbourne wrote on Thursday.
-- Written by Eric Rosenbaum from New York.
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