LS Electric splits a Taiwan power-infrastructure venture 50-50 with two Formosa affiliates

Add the two Formosa stakes, 40% for Nan Ya Plastics and 10% for KHI, and Formosa Plastics Group's side of Nan Ya L&S comes to 50%, exactly what LS Electric holds ^[3][13]. (The Korea Herald gives the venture's name as Namanakseong ^[14].) The companies did not disclose capital contributions, board seats, a casting vote or an order target.

KHI decides how even that split really is. Formosa set it up last year to invest in and commercialize technology from the Korea Advanced Institute of Science and Technology ^[6]. Its chief executive, Park Dong-seop, was at the signing ^[8]. According to LS Electric's account, KHI took its stake after noting LS's competitiveness and growth potential in the global power industry ^[7]. A company Formosa backs will most likely vote with Formosa, so I count its 10% with Nan Ya's 40% ^[6][13].

For its half, LS Electric gets a way into contracting. "Our Taiwan business, which has been limited to supplying power equipment, will be upgraded through the joint venture into a contracting business that incorporates engineering capabilities," an LS Electric official said ^[15]. The venture's stated aim covers everything from winning power projects to design and technical support on the ground ^[12]. The money it is going after includes heavy Taiwanese government investment in energy storage, digital smart grids and eco-friendly power equipment ^[9].

Three outcomes fit the facts. In the first, Nan Ya L&S wins grid contracts that specify LS-made equipment, and LS books an equipment sale plus half of a contracting margin. In the second, Nan Ya, which recently pushed its own power business into ultra-high-voltage transmission equipment ^[10], steers procurement to its local plants. LS then holds half a contracting margin on projects built with a partner's hardware. In the third, the even ownership split leaves nobody able to settle whose equipment goes in, and bids slow ^[13].

I'd expect the first outcome on early bids. As LS Electric described it, the plan puts LS's manufacturing and design capability on top of Nan Ya's local production base and EPC network ^[5]. The official said LS expects "the synergy between the two companies' capabilities to produce early results in power infrastructure contracts in Taiwan as well" ^[16]. The case against is that Nan Ya, Taiwan's largest petrochemical and electronic materials company ^[11], now has its own high-voltage line and production base to keep busy ^[10]. If the venture's first awards go out on Nan Ya hardware, that view is wrong.