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GT Advanced Technologies aims for rebirth

Union Leader Correspondent

July 22. 2018 11:45PM
President and CEO Greg Knight said GTAT is poised for tremendous growth as it pivots to material production. (Ryan Lessard / Union Leader correspondent)

CEO Greg Knight said the company didn't change its name after the bankruptcy because it still had a good reputation in Asia, where it does most of its sales. (Ryan Lessard)

HUDSON — The new facility for GT Advanced Technologies (GTAT) on Wentworth Drive in Hudson is humming with crystal furnaces, tinkering engineers and filled with unpacked equipment shipped over from its old Merrimack facility.

It has the benefit of less costly utility overhead and flexible space for rapid production scaling, but it’s also the latest reminder that the company that filed for bankruptcy following a disastrous deal with Apple has been reincarnated.

Greg Knight, the president and CEO of GTAT, said the company is almost a completely new entity with the same name. There’s a new building, new management team, new investors and a new board. But some of the key people from the original company stuck it out — folks from the technology team (including the chief technology officer), engineering and finance teams are still part of the core inner workings.

“That being said, I very much think that GT is a new company,” Knight said.

Now, Knight says the team doesn’t put much thought into the issues of the past.

“We’re clear of that, by and large,” he said.

Asked why the company didn’t rebrand after the bankruptcy, Knight said much of the negative press had to do with a U.S. deal, but they still have a favorable name and brand in Asia, which is a bulk of their clientele.

While Knight plans to move the company away from equipment sales, the company’s bread and butter historically, in the next five years, its roots in equipment design and construction will remain a part of the company’s competitive edge.

Other companies create and sell the crystal furnaces without much expertise in using them, while the companies with expertise in the crystal growth process don’t have much engineering know-how. But GTAT, Knight said, has a team of engineers and scientists that marries the two fields. This allows them to innovate and create unique products in the new industry they are pivoting toward: materials production, he said.

GTAT still builds and sells one machine, called “the continuous CZ feeder,” which produces silicon for photovoltaic cells. Though one other company has similar machines, it’s the only equipment being sold in the open market that can simultaneously feed in silicon while the product is being pulled out.

Knight said the main customers for that are in China and it’s only a matter of time before someone else rips off and replicates the technology.

“We’ve had all of our other equipment ripped off before,” he said.

The real future he sees for the company, both in terms of growth and diversification, is in the materials sector.

He said GTAT’s edge with its sapphire, produced in Salem, is it’s both high quality and a unique form. Their new silicon tube filaments are produced in a unique tube shape and the new silicon carbide, produced in the Hudson plant, is expected to see an explosion in demand by 2022, mostly from the automotive industry.

Right now, Knight said silicon carbide is a small market, with most of the demand in the U.S. and Europe for semiconductor fabricators. By 2025, China wants to pick up more of the semiconductor supply chain market in much the same way it started small with photovoltaics.

“Now, it’s almost … a third off the world’s demand has gone to China,” Knight said.

Currently, about 60 to 70 percent of its tube filament demand comes from China. They also sell to companies in Korea, Japan, Malaysia and Germany.

Selling materials that can be used in multiple industries will insulate the company from inevitable market fluctuations, Knight said.

“It lets you buffer the downturns when you’re … a materials company,” he said.

Currently, they have only two major western companies competing in the silicon carbide space. But they are unique for being the only producer that also makes its own production equipment.

The company is also able to rapidly scale up production lines based on customer orders. They can set up anything from 100 or 2,500 furnaces within three to four months, Knight said.

Ultimately, he sees this all as a formula for growth, which Knight estimates will double the company’s capacity multiple times in the next three years. This month, they just started leasing a second phase of the Hudson facility (to fit in a combined 50,000 square feet) to double their current silicon carbide production.

Eventually, they’ll fill out the entire 100,000-square-foot facility (probably by 2020). After that, they will be looking at opening a new facility.

“Without getting into forecasts and numbers, I think it’s very compelling,” he said.

In short order, he expects the company to meet or exceed the corporate value GTAT had before the bankruptcy. Knight also plans to invest in companies, through mergers and acquisitions, that will be using materials produced by GTAT to make their products.

Knight would not comment on the specific sources of investment in the future, but expects there will be a need for additional capital as market demand is expected to outstrip profits.

“A lot of it depends on a rate of expansion,” he said.

So far, the tariffs implemented by the U.S. government and by the Chinese government in response have had a negative impact on some aspects of the company, he said. In particular, it has increased the price of parts and source materials the company imports from China. It hasn’t led to the company making any different decision just yet, but it could if the situation worsens.

“These increased costs are an unnecessary burden on GT,” Knight said in an email. “The tariffs are not significant enough to change our supply chain decisions, so they only serve to make our cost of goods increase. If things continue to escalate and tariffs are increased or broadened, this would only make it more difficult to compete globally as a U.S. manufacturer.”

So far, the tariffs have not had an impact on sales to China or to European Union markets.

While development and design of the continuous CZ feeders and silicon tube filaments will remain in the U.S., production will be moved to Asia when it reaches “full production volumes,” since most of their customers will be there, Knight said.

Business General News Hudson Merrimack

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