The board of directors of Hsinchu-based Taiwan Semiconductor Manufacturing Co (TSMC, the world’s biggest silicon wafer foundry) has approved the sale of its stake in TSMC Solid State Lighting (TSMC SSL). Taiwan’s Epistar Corp (the world’s largest manufacturer of LED epiwafers and chips) will acquire all shares of TSMC SSL held by TSMC and its subsidiary TSMC Guang Neng Investment Ltd for NT$825m (NT$1.46 per share). After the transaction, Epistar will own 94% of TSMC SSL, and TSMC will completely exit TSMC SSL .The firm will be hence operated by Epistar and TSMC SSL's current team.
TSMC SSL has recently developed high-efficiency LED lighting products using phosphor-on-die (PoD) chip-scale packaging technology. However, due to oversupply following the massive expansion of the LED industry in the past several years, the firm has struggled to reach profitability. As a late entrant, TSMC SSL also faced difficulties overcoming patent obstacles and establishing sales channels.
In contrast, as the world's largest manufacturer of LED epitaxial wafers and dies, Epistar has patents recognized by the major industry players, cross-licensing with Philips and Toyoda Gosei, and a network of sales channels covering customers worldwide. “We can reach a win-win-win scenario with TSMC SSL led by Epistar and SSL’s present team,” believes TSMC SSL’s chairman Dr Steven Tso. “Epistar’s operations can take off with redoubled strength, the development of the LED industry will accelerate, and consequently TSMC SSL’s shareholders and employees will benefit,” he adds.
LED lighting demand is expected to increase significantly between 2014 and 2017, with a rapid increase in the penetration rate. Epistar acquired Formosa Epitaxy at the end of 2014 with the goal of obtaining the capacity and talent needed for the next several years of growth. Less than one month after its last acquisition, Epistar has decided to invest in TSMC SSL. “We hold an open and positive attitude towards anything that can enhance Epistar's competitiveness and shareholder value, and is beneficial to the development of the LED industry,” says Epistar’s chairman Dr Biing-Jye Lee. “TSMC SSL’s capacity may be far less than Epistar, but by working with TSMC we can be introduced to different thinking, different talent, and different systems from across industries to spark new ideas and strengthen Epistar’s future operations,” he adds. It is believed that, once TSMC SSL joins Epistar, its diverse personnel and management systems inherited from the foundry business will accelerate Epistar’s innovation.
