Taiwan Semiconductor Seeks LED and Solar Acquisitions

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract manufacturer of computer chips, is preparing to make its first acquisitions in two years, according to a Bloomberg news item.

Interestingly, the company is looking at purchases outside the computer-chip space, instead scanning the horizon for new growth opportunities through acquisitions of companies involved in light-emitting diodes (LEDs) and solar technologies.

During an interview at TSMC’s Taiwan headquarters, Morris Chang, the company’s 78-year-old chairman and CEO, wasn’t explicit about acquisition targets but explained the general approach the company would take.

“We can start out maybe first purchasing a small company, but use that as a nucleus for growth. I think we have gotten into a situation where everybody seems to be really comfortable and not particularly hungry anymore.”

Well, I don’t know whether that’s entire true, but Chang and others must be concerned about the negative-to-tepid revenue growth in the conventional semiconductor market.

The chip-foundry market, in which Taiwan Semiconductor control holds 49-percent market share, is expected to record a sales decline of as much as 20 percent this year and will take until 2011 to return to the same levels as 2008, Chang told investors on July 31.

Meanwhile, the markets are booming in which Chang is seeking acquisition targets. Global sales of LEDs, used to illuminate television screens and other displays, are projected to double over the next four years, while solar-cell industry revenue is estimated to climb an average of 45 percent in the four years from 2010.

It’s no wonder Chang is pondering diversification through acquisition.


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