Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said it plans to shut down a solar subsidiary at the end of this month due to persistent losses, signaling its exit from the green energy industry.
The closure would shave NT$0.07 from TSMC’s earnings per share this quarter, the Hsinchu-based company estimated.
TSMC’s late entry into the solar market and its lack of economies of scale placed it at a considerable cost disadvantage, the company said in a statement.
“TSMC continues to believe that solar power is an important source of green energy and that solar module manufacturing remains a robust and growing industry, but despite six years of hard work, we have not found a way to make a sustainable profit,” said Steve Tso (左大川), chairman of TSMC Solar (台積太陽能) and a senior vice president at TSMC.
The company said it would continue to provide product warranties to existing clients and would give all of TSMC Solar’s 365 employees a choice to transfer to TSMC’s fabs.
TSMC Solar’s remaining solar panel inventory will be installed at TSMC buildings and facilities, the company said.
“It is a wise decision for TSMC to cease its unprofitable solar business as the thin-film technology adopted by TSMC would not become a mainstream technology within the next two to three years,” Corrine Lin (林嫣容), a solar industry analyst with TrendForce Corp (集邦科技), said by telephone.
Less than 7 percent of the world’s 52.6 gigawatts of solar systems installed this year are forecast to use thin-film solar products, while the remainder would be silicon solar products, Lin said.
Unlike the widely adopted silicon technology, thin-film technology is hampered by higher costs and a lower sunlight conversion efficiency rate, Lin said.
TSMC Solar’s thin-film solar modules offer a conversion efficiency rate of 14.6 percent, lagging behind silicon solar module makers’ average of between 15 percent and 16 percent, Lin said.
The company’s solar fab has an annual capacity between 100 megawatts and 200 megawatts, which is also less competitive than its rivals, such as First Solar Inc of the US, which has an annual capacity of more than 2 gigawatts, she said.
In 2009, TSMC created a New Business Development Organization, with the aim of helping the chipmaker diversify into green energy businesses, including solar cells and LEDs, as annual growth in the chip industry slows to 3 percent.
TSMC had expected the new businesses to help boost its revenue, forecasting a compound annual growth rate of 4.5 percent in a 10-year period to 2018. Rick Tsai (蔡力行) was appointed to lead the new business group.
In January, TSMC sold its money-losing LED subsidiary to LED chipmaker Epistar Corp (晶電) for NT$825 million (US$25.09 million) in cash, as it exited the highly competitive LED market.
TSMC shares advanced 7.39 percent yesterday to close at NT$123.50, outperforming the TAIEX, which gained 3.58 percent.
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