TSMC Buys Solar-Cell Stake

By PERRIS LEE CHOON SIONG
TAIPEI—Taiwan Semiconductor Manufacturing Co., the world's largest contract chip producer by revenue, said Wednesday it has agreed to pay US$193 million for a 20% stake in solar-cell maker Motech Industries Inc.
The deal will make TSMC the largest shareholder in Motech and comes as Taiwanese electronics makers expand into the renewable energy industry.
Hsinchu-based TSMC said in a statement it signed an agreement to buy 75.32 million new shares to be issued by Motech through a private placement.
"With the investment, TSMC intends to leverage Motech's established platform to accelerate our time to market, better evaluate opportunities along the solar value chain, and further formulate our overall solar strategy," Rick Tsai, president of TSMC's new businesses, said in the statement.
TSMC will pay 82.70 New Taiwan dollar for each Motech share. Motech ended up 5.4% at NT$145.5 Wednesday. It has surged 88% so far this year. TSMC shares ended unchanged at NT$62.4.
Kenneth Lee, vice president at Fubon Securities Investment Services Co.'s research department, said it is a good deal for cash-rich TSMC.
"First of all, there is almost no barrier to entry for TSMC to enter the solar-cell industry as a chip foundry is much more sophisticated in terms of production technologies. Secondly, while initially the returns will be small, solar cells will be used in every aspects of our lives in the next five to 10 years, so why not?" Mr. Lee said.
Fubon Securities Investment rates TSMC at "Add," with a target price of NT$71.
Simon Tsuo, Motech's chairman and chief executive, said the tie-up with TSMC with help the company better integrate its supply chain and make its operations more efficient.
"We plan to work closely with TSMC to address new business opportunities. We believe this partnership will further enhance Motech's leadership position in the solar industry," Mr. Tsuo said.
The deal is subject to approval by Motech's shareholders and the island's regulators, TSMC said.
Write to Perris Lee Choon Siong at perris.lee@dowjones.com