TSMC supplier LCY Group President Bowei Lee said private equity firm KKR & Co. plans to gradually divest its holdings in businesses affiliated with the Taiwanese chemical group, a move he believes will give the company greater flexibility to accelerate its expansion in semiconductor materials.
According to Bloomberg, KKR holds stakes in LCY Chemical Corp. and one of its affiliated companies. Lee declined to identify potential buyers for KKR's shares. LCY supplies specialty chemicals to major semiconductor customers, including TSMC and Intel.
KKR became the largest shareholder of LCY Chemical in 2019 after investing NT$47.8 billion (approximately US$1.56 billion at the time). According to people familiar with the matter, LCY has recently sought an US$874 million loan, part of which is expected to fund capital expenditures.
Leadership transition opens door to strategic expansion
Lee said KKR's gradual exit, together with the retirement of former LCY Chemical General Manager Vincent Liu, would allow the company to pursue a more proactive growth strategy. Liu stepped down in June and now serves as an adviser to the group.
Having led LCY Group for several years, Lee said both KKR and Liu had taken a relatively conservative approach to the company's operations.
Asked about TSMC's US$265 billion expansion plan in the United States, Lee said LCY intends to move "slightly ahead" of its key customer.
LCY announced plans in 2021 to expand into the US, including an investment of approximately US$280 million to build a manufacturing facility in Arizona, which is expected to be completed around 2028. KKR is also expected to exit that business.
US expansion broadens alongside Japan partnership
Lee declined to disclose the size of any additional US investment but said the company plans to invest more than originally envisioned, potentially adding production lines for multiple products.
He also said LCY is in discussions with potential partners in South Korea and Japan regarding future investments.
In April, LCY announced a joint venture with leading Japanese materials supplier JSR Corporation, establishing JSR Advanced Manufacturing Co., Ltd., headquartered in Taiwan.
Family office remains selective on investments
Lee, who has long invested in private equity through his Singapore-based family office, said the firm will continue to avoid sectors such as private credit and data centers despite their growing popularity.
Private equity and venture capital investments account for roughly 99% of the family office's portfolio.
While the office invested in data centers around a decade ago, Lee said it has no plans to commit additional capital to the sector.
Speaking alongside his eldest son, Hendrick Lee, a partner at Palm Drive Capital, Lee said the group has had to reinvent itself roughly every 30 to 40 years to remain competitive.
Founded by Lee's grandfather in 1915 as a timber business, LCY Group has since transformed into one of Taiwan's leading specialty chemicals suppliers.
Article translated by AI bot and edited by Scarlett Yu
