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Lighting

TSMC Sells LED Subsidiary to Epistar

12 January 2015

Leading foundry Taiwan Semiconductor Manufacturing Co. Ltd. (Hsinchu, Taiwan) has decided to sell its LED-making subsidiary, TSMC Solid State Lighting, to Epistar Corp.

Epistar (Hsinchu, Taiwan) will acquire all the shares of TSMC SSL held by TSMC and TSMC’s subsidiary TSMC Guang Neng Investment Ltd. for NT$825 million (about US$25.8 million), or NT$1.46 per share. After the transaction, Epistar will own 94% of the company, and TSMC will completely exit TSMC SSL. Epistar and TSMC SSL’s current management team will operate the company.

The move comes less than one month after Epistar acquired Formosa Epitaxy at the end of 2014 in stock swap deal valued at about $54.6 million. That move was expected to give Epistar a 30 to 40 percent share of the global LED epiwafer and chip market.

TSMC SSL has inherited TSMC's corporate culture and excellence in manufacturing systems. It also developed high-efficiency LED lighting products using phosphor-on-die (PoD) chip-scale packaging but it has suffered from being a late entrant into the market, TSMC said. "The company has struggled to reach profitability due to oversupply following the massive expansion of the LED industry in the past several years," TSMC said in a statement. TSMC has also faced problems over patents and establishing sales channels, the company said.

TSMC looked to move into LED and solar markets in the midst of the depression in 2009 when its main IC foundry business suffered a collapse. Morris Chang, who had retired from that position, returned to lead the company and former CEO, Rick Tsai, was made president of a new business development organization.

In June 2009 TSMC was looking for new markets to jumpstart sales and indicated that new businesses could generate $2 billion in revenues per year by 2018.

TSMC SSL has inherited TSMC's corporate culture and excellence in manufacturing systems. It also developed high-efficiency LED lighting products using phosphor-on-die (PoD) chip-scale packaging but it has suffered from being a late entrant into the market, TSMC said. "The company has struggled to reach profitability due to oversupply following the massive expansion of the LED industry in the past several years," TSMC said in a statement. TSMC has also faced problems over patents and establishing sales channels, the company said.

"I believe we can can reach a win-win-win scenario with TSMC SSL led by Epistar and SSL’s present team," said Steven Tso, chairman of TSMC SSL.

Epistar is now the world's largest largest manufacturer of LED epitaxial wafers and dies, with patents recognized by the major industry players, cross-licensing with Philips and Toyoda Gosei, and a wide network of sales channels covering customers across the globe.

"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," said Epistar chairman Biing-Jye Lee.

Questions or comments on this story? Contact dylan.mcgrath@ihs.com

Related links and articles:

www.epistar.com

IHS Lighting and LEDs research

News articles:

LED Oversupply Likely to Continue

TSMC Reports Record Sales

TSMC Tips Low-Voltage Processes Aimed at Wearables, IoT



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