TSMC enters solar biz, invests in startup

SAN JOSE, Calif. -- Continuing to expand into new markets, silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) appears to have made its formal entry into the solar business.

TSMC and Stion Corp., a San Jose-based manufacturer of thin-film solar photovoltaic modules, have reached a series of agreements covering technology licensing, supply, and joint development.

In addition, VentureTech Alliance, a TSMC affiliate, will invest $50 million to take a 21 percent stake in Stion. Under the agreements, Stion will also license and transfer its thin-film CIGSS technology to TSMC. The technology is reportedly based on copper indium gallium (di) selenide (CIGS) materials.

TSMC will provide a certain quantity of solar modules to Stion using the technology. TSMC and Stion will also work together to enhance the thin-film technology through joint development. No other details were given, however.

“Working with Stion, TSMC gains a robust thin film technology with inherent low cost structure. With TSMC’s R&D capabilities and manufacturing expertise, we believe we can achieve long-term overall leadership in solar PV solutions, and we are happy to be able to contribute to a greener economy,” said Rick Tsai, TSMC’s president of new businesses, in a statement.

For months, TSMC has been talking about entering the solar market. Last year, Morris Chang reassumed control of TSMC. At the time, TSMC said its board named Chang to serve as chief executive, along with his current position as chairman. He assumed the CEO title from Tsai, who was appointed president and CEO of TSMC in 2005.

Chang assumed day-to-day control of the foundry giant. In his new role, Tsai now serves as president of the New Business Development Organization, reporting directly to Chang. The group will focus on new growth markets, such as LED and solar, as its traditional foundry business is slowing.

Last year, TSMC approved the appropriation of $50 million for ''possible use'' in investment in solar energy-related areas.

Then, late last year, the company said it would pay NT$6.2 billion (about $192 million) for a 20 percent stake in Motech Industries Inc. (Tainan, Taiwan). Motech is the largest solar cell manufacturer in Taiwan and was one of the top ten manufacturers worldwide in terms of production capacity and output in 2008.

At the time, TSMC did not say it would make solar cells based on Motech's technology. This appeared to be a pure investment.

In March of 2009, TSMC (Hsinchu, Taiwan) held a groundbreaking ceremony for an R&D center and wafer fab to develop and make light emitting diodes for lighting applications. The move marks a major change at TSMC which has until this point been focused on the foundry supply of integrated circuits. It will sell the LEDs under its own brand name.

Now, TSMC will make a formal entry into solar with help from Stion. Formed in 2006, Stion is backed by Khosla Ventures, Lightspeed Venture Partners, Braemar Energy Ventures, and General Catalyst Partners.

Stion's technology is based on the work of Howard Lee, a researcher in nanotechnology and semiconductor materials and devices with 28 years of corporate, government and R&D experience. The company’s President and CEO, Chet Farris previously worked as President of Shell Solar Industries and also served as President of the Solar Energy Industries Association (SEIA).

The company raised $15 million in a Series B financing in 2007 to accelerate its product development. The company sells the SN-110, SN-120 and SN-130 solar modules. Based on thin-film technology, the modules range from 10-to-11.8 percent efficiencies.