As San Jose, Calif.-based Cypress Semiconductor gets closer to the initial public offering of its SunPower Corp. subsidiary, which is planned for the fourth quarter of 2005, I get the feeling that the folks at ATS Automation Tooling Systems of Cambridge, Ont., are watching closely.

I’ve pointed out before there’s a good chance that ATS, following in the footsteps of Cypress, may be considering an IPO of its solar operations, which would include France-based Photowatt and its new solar unit Spheral Solar in Cambridge.

One step in that process was to combine the two solar businesses into a new group with its own boss. Syl Ghirardi was appointed president and CEO of ATS Solar Group in May, and has since been getting up to speed on the two businesses.

“The new Solar president and CEO is currently developing a business strategy that will entail both technical and commercial aspects, including the SSP launch schedule and the funding strategy for the Solar Group,” the company said during its first quarter fiscal 2006 conference call on August 12.

ATS CEO Ron Jutras said Ghirardi is developing ”long range strategic plans” for the solar group.

Long-range plan? Funding strategy? It sounds increasingly possible that an IPO is in the cards. Of course, ATS will let Cypress sweat it out first, evaluate how well it does, and then make a decision.

Either way, the timing is becoming more and more favourable. The silicon shortage won’t last forever, and what’s increasingly clear is that the boom in solar demand has staying power.

ATS would be wise to unlock the value in its solar business. The question is when, not if, it should do so.

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