Taiwan Semiconductor Manufacturing Company's (TSMC) foray into the copper indium gallium selenide (CIGS) photovoltaic (PV) modules could raise the entry barrier to the technology sector since the semiconductor giant's investment greatly exceeds the typical CIGS player. With TSMC actively building up capacity and supply for CIGS manufacturing equipment tight currently, it could be difficult for both old and new comers to procure the necessary equipment.

Some small- to medium-size competitors are already feeling the difficulty in meeting production line development schedule, because TSMC's investments could easily book up the entire capacity of some CIGS equipment makers for years, according to industry sources, noting that TSMC has yet to go full force into CIGS production and capacity expansion.

Additionally, CIGS manufacturing is not a mature, established process, and therefore, it is tough for companies to quickly find and transitioned to other internationally accepted equipment products.

TSMC chairman Morris Chang had previously said that he aims for the solar business to represent 10% of overall revenues by 2015 and the company recently indicated that it hopes to become a top five PV solar company globally by 2016 and ramp up CIGS module capacity to 1GWp.

TSMC will invest NT$7.92 billion (US$174 million) in the first quarter of 2011. The company plans to produce 200MWp in 2012, and ultimately ramp up capacity to 700MWp. To put that into perspective, Solartech Energy's CIGS subsidiary, Sunshine PV, which began production in 2009, only has a capacity of 30MWp currently, according to industry sources. TSMC's investment is also more than five times that of the Sunshine PV's paid-in capital.

This could mean that CIGS companies adopting similar production process and technology as TSMC could find themselves in a very tough position. The same situations could repeat in the future when more tech powerhouses invest in CIGS technology or other non-mainstream PV technology.