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Applied buys Applied and gets into solar

Applied Materials' latest acquisition underscores Silicon Valley's growing interest in alternative energy.

Applied Materials has signed an agreement to buy Applied Films for $464 million, a move that puts the world's biggest maker of semiconductor manufacturing equipment into the energy business.

Longmont, Colo.-based Applied Films specializes in equipment for physical vapor deposition--complex machines for layering thin, uniform layers of materials onto surfaces. Solar panel manufacturers, LCD makers and producers of energy-efficient glass buy equipment from Applied.

Applied Materials, meanwhile, is mostly known for machines that perform similar functions, but in the semiconductor industry. Chemical vapor deposition systems from Applied, for instance, are used to blow copper gas into a chamber containing a silicon wafer. The copper is then electroplated to the wafer. Applied Materials has produced prototypes of solar tools, but not actively marketed them to date.

The two companies do have some overlap in the flat-panel market.

The acquisition underscores Silicon Valley's growing interest in alternative energy. In 2005, the amount of silicon used in solar panels exceeded the amount used in semiconductors, said Nick Parker, founder of the Cleantech Venture Network. Several VC firms such as Mohr Davidow Ventures have plunked money into energy start-ups.

The rapid growth in demand for solar technology, fueled by rising oil prices and government subsidies to encourage solar proliferation, has created a shortage of solar panels.

"The acquisition of Applied Films expands our flat-panel business to offer color-filter products and opens the fast-growing solar market for us," Mike Splinter, president and CEO of Applied Materials, said in a statement. "Both companies have a strong history of developing new and innovative technologies. Together, we expect to speed the development and availability of new products for a variety of emerging applications."