Applied Materials, a supplier to solar power plant manufacturers, on Wednesday exposed a retrenchment in parts of the industry with the closure of its thin-film product line at a cost of up to $425m.

The US group, which supplies equipment needed to make photovoltaic solar panels, said it would no longer supply manufacturing lines to companies that use thin-film solar technology, a field that had been seen as a promising area of renewable power.

Start-up groups working on thin film were at the heart of a boom in venture capital investment in alternative energy and other “clean tech” areas in 2007 and 2008.

Thin-film technology can achieve a higher power-conversion rate than older photovoltaic techniques, turning more sunlight into power.

But higher costs and the difficulty of perfecting new manufacturing techniques have plagued the field.

Expansion of solar plants in China using older but more proven technologies has seen a shift in the industry’s focus to Asia.

Applied Materials’ diversification in the middle of the last decade into solar equipment manufacturing, to complement its chip equipment business, was one of the earliest signs of the Silicon Valley technology industry refocusing on “clean tech” markets.

On Wednesday, the group blamed a number of factors for pulling back, including the problems that solar manufacturers have had in raising the capital needed to develop their own plants.

The solar industry in the US had hoped stimulus spending and government guarantees would alleviate some of the problems caused by the debt crisis that took hold in late 2008, but that has not made up for market retrenchment.

Some investors were predicting a shake-out in thin film before the financial crisis, given the high level of start-up investment in an unproven field.

Applied Materials also pointed to a delay in the adoption of large-scale solar plants by electricity utilities for its decision to pull back, along with “changes and uncertainty” in government policies.

In spite of ending its thin-film product line, the group said it would continue to invest in thin-film technology research and development and would keep a China research centre open.

The pull-back was expected to lead to a charge against earnings of $375m-$425m, it said.

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