Innolux recently announced the sale of its fourth factory in Tainan, a Gen 5.5 LCD panel manufacturing facility. As previously reported by the Economic Daily, there is speculation that both Micron and TSMC are actively evaluating the possibility of acquiring the factory.
At present, TSMC is actively expanding production capacity and continues to increase equipment investment. According to a report by the Liberty Times on August 15, TSMC has signed a contract with advanced packaging and panel manufacturer Innolux to acquire its factory and related equipment in the Southern Science Park.
The total plant area of the transaction is more than 96,000 square meters, and the transaction price is NT$17.14 billion, which is lower than the market forecast of about NT$20 billion. TSMC said the facility will be used for its operations and manufacturing.
TSMC's advanced packaging technology has always had many advantages, such as the use of technologies such as CoWoS (Chip-on-Wafer-on-Substrate), which allows TSMC to pack more chips and memories in a smaller space, thereby improving overall performance. Advanced packaging technologies reduce power consumption by optimizing connectivity and data transfer between chips, especially in high-performance computing and artificial intelligence applications, which can help improve energy efficiency. In addition, TSMC's 3D integration technology allows customers to integrate chips from different process nodes together, accelerating the process of products from design to market.
With an average increase in chip size of 5-10%, the number of chips that can be produced per wafer has decreased, further increasing the pressure on wafers and advanced packaging capabilities. Industry insiders believe that the transition from wafer-level packaging to panel-level packaging is a reasonable choice. In addition, TSMC reportedly bid 20% higher than its initial pricing, showing its determination to enhance its advanced process and packaging capabilities.
Figure:TSMC Expands its Advanced Packaging Capacity
According to the Liberty Times, sources in the Southern Science Park revealed that TSMC's original factory is located in the northwest area of the park, while the newly acquired Innolux factory is located in the southwest area, and the distance between the two factories is relatively long.
TSMC had previously acquired a factory at Hannstar and demolished it for reconstruction, as the design and construction requirements of the panel fab were different from those of the fab. TSMC also purchased a facility from Yitong Optoelectronics in the South Taiwan Science Park, which is currently used as a smart warehouse.
Considering that Innolux's share capital is NT$79.8 billion after capital reduction, the transaction is expected to generate approximately NT$1.84 per share for Innolux, which is considered a cost-effective option.
Innolux previously closed its Gen 5.5 LCD panel factory in response to overcapacity in the LCD panel industry and sought to transform, and the sale of the factory not only brought valuable cash flow to Innolux, but also provided financial support for the company's strategic transformation. For TSMC, this transaction is an effective way to quickly obtain urgently needed plant resources, shorten the time cycle for capacity expansion, and alleviate the capacity shortage caused by the surge in market demand.
