Applied Materials, a leader in chipmaking equipment, is ramping up on solar-panel machines and counting on European regulations for business.

A field of solar panels near Leipzig, Germany Europe has set an ambitious target to obtain 20 percent of its energy from renewable sources by 2020. Trouble is, even if only one-quarter of it comes from the sun, that much power will require enough solar panels to generate 200 gigawatts of electricity. That's a tall order -- some 25 times the current annual production of solar panels around the world. Clearly, manufacturing volumes have to jump, or Europe's green energy target will be out of reach.

Help is on the way from an unlikely source: Silicon Valley's Applied Materials, the world leader in chipmaking equipment. For 40 years, Applied Materials has been producing high-precision manufacturing gear for semiconductors and flat-panel displays; now it's racing to sell specialized machines that churn out solar panels more cheaply and in higher volumes than ever before.

The immediate goal is to drive down the cost-per-watt of solar electricity by at least 25 percent -- and eventually bring it to parity with conventional sources such as coal and natural gas. "Applied has a history of using technology and smart engineering to lower cost and grow markets," says Chief Executive Mike Splinter. "We see a real opportunity to change the cost equation for solar power through adoption of our existing technology and new innovation."