Taipei, August 16 – Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, has announced the purchase of a plant and equipment from flat panel maker Innolux Corp. for NT$17.14 billion (US$531 million). The acquisition, located in the Southern Taiwan Science Park, encompasses a 317,445 square meter facility and related equipment.
While TSMC states the purchase is for general operational and production needs, analysts believe it’s a strategic move to expand the company’s advanced 3D Chip on Wafer on Substrate (CoWoS) IC packaging services, crucial for the booming artificial intelligence (AI) market.
TSMC Chairman C.C. Wei has previously indicated the company expects to double its CoWoS capacity in 2024 and 2025, aiming to alleviate the current supply crunch by 2025 and achieve stability by 2026.
Beyond CoWoS, TSMC is also developing Fan-out Panel Level Packaging (FOPLP) technology, a more advanced packaging solution than standard wafer-level packaging (WLP). Analysts speculate that TSMC might collaborate with Innolux on FOPLP development, citing reports of meetings between their respective R&D teams.
This acquisition marks TSMC’s commitment to offering a comprehensive one-stop service to its clients, encompassing high-end IC packaging alongside chip manufacturing. TSMC expects FOPLP technology to be fully operational within three years.
The transaction is expected to benefit Innolux, generating an estimated NT$14.7 billion in revenue and boosting its earnings per share by NT$1.62 this year.
This acquisition comes amidst TSMC’s ongoing expansion of its CoWoS capacity, with a new plant under construction in Chiayi, southern Taiwan. However, construction was halted in June due to the discovery of a suspected archaeological ruin.
The acquisition of Innolux’s plant represents a significant step for TSMC as it seeks to solidify its position in the rapidly growing AI chip market and meet the increasing demand for advanced packaging solutions.
