A Fat Load of Thin Film

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If you follow the solar space at all, you know that polysilicon supply bottlenecks are a major source of cost pressure in the industry today. To secure the raw material, Suntech Power (NYSE: STP) has been signing a slew of supply deals. Trina Solar (NYSE: TSL), meanwhile, almost moved into polysilicon production -- and then didn't.

Thin-film solar players don't have to hold their breath waiting for that fateful day. First Solar (Nasdaq: FSLR), which employs a blend of cadmium and tellurium in its cheaper, lower-capacity modules, side-steps silicon and sports outlandish margins today. The mass production of thin-film panels has piqued the interest of would-be solar sultans around the world, so let's look at three recent developments.

The details are still murky, but it's now widely believed that Best Solar, a new company headed by the CEO of solar-wafer maker LDK Solar (NYSE: LDK), is the mystery company behind Applied Materials' (Nasdaq: AMAT) massive $1.9 billion thin-film equipment order. Whoever the buyer, that's enough equipment for a gigawatt of annual production. For a point of reference, First Solar is projecting 420 to 460 megawatts in sales this year and capacity of 1 gigawatt by late 2009.

Two more players have thrown their hats into the ring. Germany's Q-Cells (OTC BB: QCLSF.PK), which is also party to a String Ribbon joint venture with Evergreen Solar (Nasdaq: ESLR), has arranged to set up a thin-film shop south of the border, in Baja California, and says it will invest $3.5 billion over the "mid- to long term." Meanwhile, Abu Dhabi is pouring $2 billion into a new, state-backed thin-film producer called Masdar PV. That company is targeting the magic figure of 1 gigawatt of capacity by 2014.

I'd tell First Solar to watch its back, but it's well aware of the bull's-eye that's been firmly planted there.

Related Foolishness:

• Applied Materials has seen the light.
• LDK's a future play.
• These solar players have me seeing double.