MEMC Electronic Materials doesn't waver from its devotion to wafers. MEMC supplies silicon wafers ranging in size from 100mm to 300mm -- four inches to one foot -- in diameter. In addition to standard prime polished wafers, MEMC makes epitaxial wafers (which have an added layer of single-crystal silicon) for advanced chips, as well as lower-grade wafers used to test chip-making equipment and production lines. The company also makes solar wafers and sells solar-grade polysilicon, both of which go into making solar cells. Its SunEdison unit develops solar energy projects in North America and Europe. Customers outside the US account for nearly two-thirds of sales.
The US represents MEMC's largest market, accounting for more nearly 30% of sales, followed by Taiwan (16%) and Canada (10%). The company saw heavy year-over-year declines in its Asian markets (including an 85% drop in China), while the US and Canada grew about 65% and nearly 140%, respectively.
MEMC has manufacturing and administrative facilities in Italy, Japan, Malaysia, Singapore, South Korea, Taiwan, and the US.
Sales and Marketing
The company markets its wafers through a direct sales force and a global network of customer service centers. The duration of its sales agreements is generally one year or less. MEMC's solar energy projects are sold directly, as well as through local and regional channel partners. Its wafer customers include virtually all of the leading semiconductor device makers and foundries. MEMC's solar energy customers include enterprises, governments, and utilities.
After two years of solid revenue growth (following a drop in 2009 because of the difficult economic environment), MEMC reported a 7% decline in sales in 2012 to $2.5 billion. The continued downturn in the semiconductor industry resulted in lower average selling prices across all wafer diameters. The company's solar energy segment also suffered, with an increase in solar energy systems sales (due to utility projects in North America) unable to offset a steep decline in solar wafer sales as MEMC is shifting the focus of its solar wafer business to serve its internal needs.
The company also saw a net loss in 2012, but the $151 million loss was significantly better than the $1.5 billion loss from 2011 when MEMC was impacted by a downturn in the solar industry and substantial restructuring and impairment charges.
To combat its financial struggles, the company initiated a reorganization in late 2011 that included workforce reductions of about 20% (some 1,400 employees), facility closings and reductions in capacity, and cutting back on joint venture activities. These actions continued into 2012.
MEMC has seen a growth trend in its SunEdison business and it plans to continue that growth through expansion of project development into more countries in Europe and Asia, as well as in South Africa and South America.
Mergers and Acquisitions
Expansion at home, though, wasn't off the table, as in 2011 MEMC, jointly with SunEdison, bought the US subsidiary of global solar power plant developer Fotowatio Renewable Ventures (FRV), in a deal worth up to about $235 million. MEMC hopes the addition will help it gain traction toward being a dominant US utility player.
In 2010 MEMC bought Solaicx, a manufacturer of solar-grade silicon wafers and ingots, to give it expanded capacity to manufacture wafers and ingots using less expensive monocrystalline silicon, which can be used to bring down the cost of solar cells and modules. Later that year, MEMC also entered into a module production agreement intended to lower costs further and strengthen its supply chain for integrated solar projects.