Taiwanese Firms Rush Into Solar-Cell Production

On June 16, the Taiwan Semiconductor Manufacturing Co. (TSMC) announced its acquisition of a 21% stake in Stion, a U.S. thin-film solar cell maker. The US$50 million purchase gives TSMC a distinct edge over its domestic counterparts in the race for the promising solar-cell market.

As part of the deal, Stion has pledged to license and transfer its CIGS (copper indium gallium selenide) technology to TSMC for the establishment of a solar cell plant. TSMC, in return, will reserve a certain share of the plant's output to Stion.

The deal follows TSMC's acquisition of a 20% stake in Motech Industries, Taiwan's leading solar-cell maker using silicon-crystal technology, at a cost of NT$6.2 billion (US$194 million at NT$32:US$1) last December. The two deals give TSMC the means to utilize both silicon-crystal and thin-film technologies in making solar cells.

The new deal once again underscores TSMC's aggressive move into the green energy market, including solar energy and LEDs (light emitting diodes). The initiative is being orchestrated by the company's green-energy division under the leadership of TSMC's former CEO, Rick Tsai.

TSMC's initiative echoes the government's vigorous efforts to push the development of the green energy industry. In 2009, the Executive Yuan (the Cabinet) rolled out a "green-energy industry kick-off program," which envisions the development of Taiwan into the world's third largest solar-energy producer and R&D bastion.

To achieve that goal, the government plans to spend NT$25 billion (US$758 million) over a five-year period subsidizing seven green-energy industries: photovoltaics, LED (liquid-emitting-diode) lighting, wind power, bio-fuel, hydrogen energy and fuel cells, energy IT (information technology), and electric cars. The aim is to create a booming domestic market for green-energy products.

One of the targets of this program is to triple the production value of the domestic solar-cell industry to NT$450 billion (US$14 billion), and thereby create 45,000 jobs, by 2015.

Other domestic manufacturers have also responded to the government's call. In January this year, for instance, the board of directors of AU Optronics, Taiwan's leading flat-panel display supplier, approved a plan to invest 15 billion yen (NT$5.27 billion) to obtain a majority stake in M. Setek, a Japanese solar-cell maker that uses silicon-crystal technology. AUO chairman K.Y. Lee vows to make his company the green-industry leader in Taiwan, with green products (including LED products) accounting for 10% of its revenue within three years.

Others are entering the upstream poly-silicon solar-energy sector. Lee Chang Yung Chemical is building a poly-silicon solar-cell plant in the Pingtung Export Processing Zone; this plant, costing NT$20 billion (US$625 million) and scheduled to enter trial production in late June, is the first of its type in Taiwan.

Top Green Energy Technologies broke ground for its own poly-silicon plant in the Changhua Coastal Industrial Zone last year, with a first-phase investment of NT$3 billion (US$93.8 million). Taiwan Glass has joined hands with Green Energy Technology, a member of the Tatung Group, to invest NT$3 billion in the first-phase construction of a poly-silicon plant in Taoyuan, which is scheduled for inauguration in March 2011. Formosa Chemicals and Fibre Corp., part of the Formosa Plastics Group, plans to invest NT$10-20 billion (US$313-626 million) in a poly-silicon plant in the Mailiao Offshore Industrial Zone in Yunlin County; this project, however, still needs to overcome a water-supply problem.