TSMC, the world’s largest semiconductor foundry, will buy 75.3 million shares of Motech at a 17% discount to their 3-month trading average. The $193m purchase price vastly exceeds the $50m investment TSMC’s board reportedly approved in August to allow the Hsinchu-based firm to dip its toes into the solar industry.

The news follows close on the heels of an announcement from Gintech, the second largest Taiwanese solar-cell maker, that it will splash out $170m doubling its production capacity to more than 1 gigawatt within the next two years, as it looks to tap surging solar demand across Asia.

Speculation has run rampant in recent months regarding TSMC’s plans to buy its way in to Taiwan's frothy solar sector, whose operations naturally overlap with the semiconductor business. TSMC has been linked to a number of mostly smaller potential solar takeover targets within Taiwan, including Neo Solar Power and Powerchip.

TSMC chief executive Morris Chang recently expressed concern about the economic challenges still facing Taiwan, emphasising the importance of a diversified revenue base. Chang says the falling US dollar will soon force a sizeable appreciation of the Taiwanese New Dollar, which will take a heavy toll on one of the world’s most export-dependent countries.

Rick Tsai, president of TSMC’s new businesses division, says the company will leverage Motech’s established foothold to accelerate its entry into the Asian solar sector, and use its expertise to “further formulate our overall solar strategy”.

The capital injection will allow Motech, already one of the world’s 10 largest solar-cell makers, to dig its way out of the financial wreckage of 2009 and prepare for the whipsaw in demand many now predict for 2010.

Motech has choked on its excess inventory as demand for solar systems collapsed over the last year.The firm lost $12.1m in the nine-month period to 31 October, compared to a profit of $65m during the same period last year.