TSMC Acquires Innolux's Tainan Plant For $530.6 Mn

Taiwan Semiconductor Manufacturing Company (TSMC) has stated that it has acquired Innolux Corp's flat-panel display plant in Tainan for USD 530.6 million. This strategic decision comes as TSMC faces supply restrictions in its advanced packaging capabilities, owing to increased demand for artificial intelligence (AI) chips.

The semiconductor foundry service provider intends to use the Tainan facility for future operations, but it has not revealed whether the factory would be reconfigured for panel-level packing or extended to increase its chip-on-wafer-on-substrate (CoWoS) capability. TSMC chairman C.C. Wei emphasised in June that the business urgently needed to more than double its CoWoS capacity by the end of next year to solve the significant shortfall created by AI chip demand.

Innolux, a firm in the flat-panel display sector, closed its 5.5-generation factory last year owing to losing competitiveness in creating cost-effective displays. The company is now focusing on upgrading its existing facilities and expanding into chip packaging, with the goal of generating revenue from both the display and non-display industries.

The acquisition represents a key milestone for Innolux, allowing the company to form critical connections in the global technology sector. Innolux chairman Jim Hung emphasised the possibility of new business prospects stemming from the asset disposal, which might help the company's technological capabilities.

Innolux has previously converted a 3.5-generation facility to allow fan-out panel-level packaging (PLP) for low-cost chip packaging services including power management and radio frequency chips. This action is consistent with Innolux's overall goal of developing semiconductor packaging technology and capitalising on AI-driven market prospects. According to Innolux President James Yang, the new chip packaging business is expected to generate considerable revenue beginning in the first quarter of 2025.