TSMC Solar, a 100% owned subsidiary of Taiwan’s TSMC, announced to cease manufacturing operations at the end of August, 2015 because the solar business has been recognized as no longer economically sustainable. TSMC Solar focused on manufacturing CIGS thin-film solar modules.

“Despite six years of hard work we have not found a way to make a sustainable profit,” said Dr. Steve Tso, Chairman of TSMC Solar and Senior Vice President of TSMC, in a statement. “Upon ceasing manufacturing operations at TSMC Solar, our most important concern will be the continued employment of our workers there."

Morris Chang, founding Chairman of TSMC, said that he “will gamble on the solar business” earlier this year, while the company believes that solar power is an important source of green energy and that solar module manufacturing remains a robust and growing industry. However, TSMC Solar’s late entry to the market and lack of economies of scale led to a substantial cost disadvantage. After careful consideration, TSMC has come to the conclusion that despite its world-class conversion efficiency for CIGS technologyup to 16.5%, TSMC Solar will not be viable even with the most aggressive cost reduction plan.

TSMC has 100MW~200MW of CIGS production capacity. Although TSMC decided to cease the Solar segment business operation, the company will continue to honor all product warranties that have been offered to existing customers, and will also extend employment offers to all 365 employees currently working at TSMC Solar in Taiwan upon the closure of its fab, located at Central Taiwan Science Park in Taichung.

TSMC estimates that charges related to closing the solar subsidiary’s fab will impact third quarter 2015 earnings per share by NT$0.07. Remaining solar panel inventory will be installed at TSMC buildings and facilities.

Today’s Global Thin-film Business

Today, the major thin-film solar manufacturers are: First Solar (USA), a CdTe maker that develops CdTe modules with efficiency as high as 18.6% for real-world products and 21.5% in labs. Solar Frontier (Japan), a company that makes light, thin, and bendable CIS modules with a conversion efficiency of approximately 13%. Hanergy Thin-film Power, a Chinese firm focusing on manufacturing CIS and GaAs thin-film modules.

In Taiwan, there are three CIGS module makers: TSMC Solar, HULKeT and Sunshine PV Corp. HULKeT has successfully developed CIGS modules with efficiency close to 14%.

Solar Frontier and First Solar are the only two thin-film companies that are able to establish stable and reliable business models. Other manufacturers could face the same problem with TSMC Solar as they are less cost-competitive due to their smaller scale business. Thin-film companies without sufficient capital supports could be financially difficult because thin-film modules’ conversion efficiencies are not competitive enough for them to win constant orders over silicon-based PV cells.

(Photo Credit: TSMC)