In a major move into the solar-cell and other equipment markets, Applied Materials Inc. on Thursday (May 4) announced a definitive agreement to acquire Applied Films Corp. for $464 million in cash.

With the surprising acquisition of Applied Films (Longmont, Colo.), chip-equipment giant Applied Materials (Santa Calif.) expands its product portfolio. Applied Films is a supplier of thin-film deposition equipment used in the manufacturing of flat-panel displays, solar cells, flexible electronics and energy-efficient glass.

Applied Materials, the world’s largest chip-equipment vendor, is a major player in the flat-panel display tool arena, but the company has not participated in the solar sector. However, Applied Materials is quietly working on its own, internally-developed machines for solar-cell applications, according to analysts.

Applied Films' physical vapor deposition (PVD) tools are said to be complementary with Applied Materials' existing machines for flat-panel displays. Applied Materials is a supplier of chemical vapor deposition (CVD) and test equipment for manufacturing the display's transistor layer, while Applied Films is a recognized leader in the production of display color filter systems and has developed significant expertise in large area PVD.

"The acquisition of Applied Films expands our flat-panel business to offer color filter products, and opens the fast-growing solar market for us," said Mike Splinter, president and CEO of Applied Materials, in a statement.

"In solar cell manufacturing, we expect to help customers deliver higher levels of output at lower production cost — a critical step to making alternative forms of clean energy more available and affordable,” said Mark Pinto, senior vice president and chief technical officer of Applied Materials, in the same statement.