[News] Panel Maker Innolux Fab 5 Reportedly Eyed by ASE, OSAT Firms — Micron Out of Picture

AI-driven demand is fueling a new wave of capacity expansion, and the market is now suggesting that Innolux’s Nanke (Southern Taiwan Science Park) Fab 5 may be sold. According to Liberty Times, panel maker Innolux plans to sell the facility to a major semiconductor packaging and testing company, with a formal announcement to follow board approval and the signing of the agreement. The report also states that the buyer is not Micron, contrary to earlier market speculation.

In response to the rumors surrounding Nanke Fab 5, Innolux did not confirm the identity of the buyer yesterday but emphasized that any asset allocation decisions will be carefully evaluated in line with its long-term strategy. The company added that any material developments will be disclosed in accordance with regulations.

ASE’s Expansion Plans Draw Focus Amid Innolux Fab Sale Speculation

Industry speculation points to a major semiconductor packaging and testing company as the potential buyer. As the report notes, SPIL, a subsidiary of ASE, is part of NVIDIA’s AI supply chain. In addition to building new packaging and testing facilities in central Taiwan, SPIL also spent NT$2.801 billion in mid-January this year to acquire the Zhunan plant of solar manufacturer URE through a competitive bidding process, underscoring its strong confidence in future market prospects.

Such aggressive expansion aligns with ASE’s broader growth outlook. At a recent investor conference, ASE stated that advanced packaging and testing revenue reached US$1.6 billion last year and is projected to double to US$3.2 billion this year as AI applications become more widespread.

Amid strong demand for advanced packaging and testing capacity, ASE plans to add US$1.5 billion in investment this year to expand capacity. Institutional investors cited by the report estimate the company’s total capital expenditure will reach a record US$7 billion in 2026.

AI-Driven Capacity Expansion Spurs OSAT Facility Acquisitions

This wave of AI demand has also prompted other packaging and testing companies to acquire new facilities to expand capacity. As the report indicates, OSAT provider Powertech announced in November last year that it would acquire AUO’s Gen 3.5 fab in the Hsinchu Science Park for NT$6.898 billion, primarily to expand high-end panel-level fan-out packaging (FOPLP) capacity to meet strong advanced packaging demand from AI and HPC applications.

The report adds that Innolux’s Nanke Fab 4 was sold to TSMC for more than NT$17.1 billion the year before last and has since been converted into TSMC’s advanced packaging facility, AP8. However, with new facilities in the Chiayi Science Park set to come online and further construction continuing, TSMC is reportedly inclined not to pursue additional plant acquisitions for advanced packaging conversion, even amid tight capacity.

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(Photo credit: Innolux)