31 August 2009—Taiwan's United Microelectronics Corp. (UMC), the world's second-largest silicon foundry, says it will allocate NT $1.5 billion (about US $46 million) to launch a subsidiary to invest in solar, LED, and some other high-growth industries. The move follows a similar-size investment by its larger rival, Taiwan Semiconductor Manufacturing Co. (TSMC).
The UMC subsidiary, called UMC New Business Investment Corp., will be led by UMC senior vice president Wen-Yang Chen and aims to acquire majority shares of its investment targets and to aggressively participate in the operation of the acquired firms. The company said in a 24 August press release that its technologies "are highly applicable to the fundamentals of these two industries [solar and LEDs]." UMC says it plans to complete the development of related technologies and establish preliminary operations in the coming days.
UMC already has several investments in solar and LEDs. The company founded NexPower Technology Corp., which produces thin-film solar cells. In the LED sector, UMC has acquired shares of several Taiwan-based enterprises, including LED chipmaker Epistar Corp., packaging houses Harvatek and High Power Lighting Corp., and sapphire-substrate provider Crystalwise Technology.
UMC has also recently made some other commitments. In the wake of a cross-Strait conference on the LED industry held in Taipei in June, UMC signed an agreement with the city of Jinan, China, to establish an LED supply chain by the end of this year, including LED chipmaking, packaging, and lighting products.
In June, UMC's business rival, TSMC, which dominates the semiconductor contract manufacturing industry, announced an ambitious business strategy to go into green technology—specifically solar power and LEDs. On 11 August, TSMC's board of directors decided to allocate $50 million to invest in solar-energy-related areas. TSMC spokesperson Jin-hao Tseng told IEEE Spectrum that this is just starter money and that it will be followed by more investment. In the solar energy sector, Tseng says, TSMC has not decided whether it will develop its own products or order materials from others.
Fritz Morgan, an LED expert for Philips Color Kinetics, told IEEE Spectrum that TSMC's entry into this market makes sense. LEDs are rapidly being adopted as backlights for LCD units in computer monitors and TVs. "A result of this is that a large number of low-cost LEDs will be required," he says. TSMC is known for its ability to reduce the cost of manufacturing high-volume products, notes Morgan. "This will hurt some of the other LED producers, but the overall industry will benefit greatly from lower-cost, higher-quality LEDs being available," he says.
According to Morgan, the LED lighting industry in particular has greatly benefited from all the LED chip companies competing to drive the cost of the chips down. "In general, as these large foundry companies move into the LED and solar space, it only helps the companies that are making end products, as it drives efficiency up and cost down, thus making the end products cheaper," Morgan says.