Solar panels are a small piece of Applied Materials’ business. But the chip maker has bet about $1 billion that the sector will grow.

Applied’s latest acquisition is Italian solar equipment maker Baccini for $334 million. The acquisition, announced in November 2007, was finalized this week. In August, Applied bought Swiss solar wafer equipment company HCT Shaping Systems for $483 million, earth2tech reports.

Applied is riding a wave of chipmaking firms moving aggressively into the solar business. And the strategy makes sense, the Silicon Valley/San Jose Business Journal reports. Semiconductor businesses are growing about 10 percent a year, while the solar panel business is growing about 40 percent per year.

The New York Times points out that the leading edge of solar development is in the same place much of the earlier technology revolution took off — California, especially Silicon Valley. The Times points out that much of the demand for solar energy comes from California companies and consumers.

Earth2tech: Applied Materials Buys Italian Solar Equipment Maker for $334M
bizjournals.com: Chipmakers see bright future in solar industry
New York Times: A Green Energy Industry Takes Root in California