Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s top chipmaker on a contract basis, yesterday said it planned to buy a 20 percent stake in the nation’s largest solar cell maker for NT$6.2 billion (US$192 million) — its first significant move into the green energy sector.
TSMC inked an agreement with solar cell maker Motech Industries Inc (茂迪) to buy 75.32 million new Motech shares via a private placement at NT$82.7 per share, representing a 16.9 percent discount on Motech’s three-month average closing price, a joint statement said.
That would make TSMC the biggest shareholder of Tainan-based Motech.
“We are delighted to team up with Motech in our pursuit of new opportunities in the high-growth solar sector,” Rick Tsai (蔡力行), president of TSMC’s New Businesses department, said in the statement.
“With the investment, TSMC intends to leverage Motech’s established platform to accelerate our time to market, better evaluate opportunities along the solar value chain, and further formulate our overall solar strategy,” Tsai said.
Tsai, former CEO, was appointed to lead the New Businesses department in mid-June to explore opportunities in green energy, especially solar energy and light-emitting-diodes (LED).
TSMC chairman and chief executive Morris Chang (張忠謀) told investors in July that a consultant said the new solar and LED sectors could be worth between US$10 billion and US$15 billion over the next few years.
TSMC is looking for a new growth engine outside the semiconductor industry as momentum in the industry is slowing down.
“The investment [in Motech] proves that TSMC is making progress tapping into new green energy businesses,” said Kenneth Lee (李克揚), a semiconductor industry analyst with Fubon Securities Investment Services Co (富邦投顧).
“We think this is a good deal as Motech is the industry leader and has a competitive edge. Besides, it’s a real bargain,” Lee said.
The new business would make a minimal contribution to TSMC at less than 1 percent of its total revenues of NT$364 billion next year, Lee said.
As such, Lee kept his “add” rating made last month on TSMC, meaning that the stock may have absolute return of between 10 percent and 30 percent within the next six months.
However, the purchase of Motech will help TSMC better understand the solar industry supply chain as Motech operates a vertical integration strategy and has in-house ingot and wafer capabilities and a majority investment in polysilicon production using advanced fluidized bed reactor technology.
Joining the green energy trend, United Microelectronics Corp (聯電) in August created a business development center and venture capital fund called UMC New Business Investment Corp (聯電新投資事業公司) to invest in the solar and LED sectors.
TSMC shares were unchanged at NT$62.4. The stock price of Motech soared 5.43 percent to NT$145.5.
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