Taiwan's UMC, the world's No.2 contract chip maker, is following sector leader TSMC by diversifying into solar-related markets as they look for new growth drivers beyond chip foundries.
UMC's board approved a plan to set up a wholly owned investment company, UMC New Business Investment Corp, which would be capitalized at T$1.5 billion ($46 million) and invest in solar and LED markets.
"This will bring new momentum for UMC to further grow and enhance UMC's future asset turnover and profitability," UMC said in a statement after the Taipei stock market closed on Monday.
UMC's Taipei-listed shares surged 7 percent to their daily limit before the announcement, outpacing the main TAIEX's 2.76 percent rise. TSMC shares jumped 2.8 percent.
"Technologies for renewable energy and energy saving will become the focus for future technology development; the growth of related industries is predictable," UMC said.
UMC would also set up a new business development center and Chen Wen-yang, a senior UMC vice president, will be in charge of the operation of the new center, the company said.
About two weeks ago, TSMC said it would allocate $50 million for possible investments in solar energy-related areas, including LEDs (light-emitting diodes). TSMC did not give other details on its potential investments.