Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday held a groundbreaking ceremony for its first LED research and development center and LED lighting manufacturing plant in Hsinchu, marking the world’s top contract chipmaker’s diversification into the rapidly growing green energy market.
Ten months ago, TSMC unveiled a plan to set up a new business group to explore next growth drivers in clean energy, such as the solar and LED sectors.
In the initial phase, TSMC plans to spend NT$5.5 billion (US$173 million) to build an LED R&D center and a plant in Hsinchu to develop integrated LED technology, process, and packaging and testing. It will begin by offering LED light sources and light engines.
PHOTO: CNA
TSMC also bought a 20 percent stake in the nation’s biggest solar cell maker Motech Industries Inc (茂迪) for about NT$6.23 billion in January.
The chipmaker plans to spend 2 percent of its projected capital spending of US$4.8 billion this year on the new businesses.
Some have questioned the chipmaker’s decision to diversify into the solar and LED sectors amid concern over thinner profit margins compared with the contract chip business.
TSMC chairman Morris Chang (張忠謀) yesterday sought to reassure investors by saying that “the new businesses will be the same [success as its core foundry business] ... Will we enter a business that offers slim profits? No, we won’t.”
Chang said that more than two decades ago, there were also concerns that foundry would be a low-margin business with no future, but now it has become a high profit business with TSMC holding a leading position in the sector.
“I believe the two new businesses will grow swiftly and offer high profit margins,” Chang said.
“The new businesses, I believe, will be a very important [driver] for TSMC five to 10 years from now,” he said.
Last summer, TSMC board appointed former chief executive Rick Tsai (蔡力行) to form a new business unit to explore growth opportunities in green energy sector as overall growth in the semiconductor industry was expected to decelerate in the long term.
The company plans to start equipment installation at the LED factory at the end of the year and start operating next year, Tsai said.
Tsai declined to reveal further details about the new businesses. He only said TSMC would develop its own LED-related technologies and it planned to expand its LED staff to more than 130 people by the end of this year, from about 50 at the moment.
TSMC rival United Microelectronics Corp (聯電) is also moving into the green energy sector. UMC created a business development center and venture capital fund called UMC New Business Investment Corp (聯電新投資事業公司) last August to seek investment opportunities in the solar and LED sectors.
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