TSMC allocates $50 million for solar investments

The world’s largest contract chip maker TSMC on 11 Aug 2009 said it would allocate $50 million for possible investments in solar energy-related areas, as part of its efforts to diversify into the solar market. No other details were given, however.

The company had said about 2 months ago it planned to venture into LEDs and solar energy as it sought diversification and long-term growth drivers beyond chip foundries. TSMC said its new non-foundry business would garner revenue of another $2 billion by 2018 and it did not rule out spinning off its new businesses in the future.

A local newspaper said that TSMC was likely to buy a stake that Powerchip owns in Neo Solar Power, while the paper said TSMC and Neo Solar declined to comment.

Comment: TSMC was the parent company of my previous company. It is no surprise that TSMC is diversifying out of its highly cyclical foundry business. The cash-rich company has been looking to invest its cash for some time, eg TSMC became the first Taiwanese semiconductor manufacturer to enter India when it opened an office in Bangalore in 2007. Furthermore, by extending its business to solar market, it can negotiate down the cost of its supplies even more (eg silicon is used in both semiconductor and solar cell manufacturing). Its lower operating and production costs has contributed to its ability to lead in R&D and using more advanced and cost-effective technologies.