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TSMC ready to sell stake to Chinese companies

Posted: 12 Nov 2015 ?? ?Print Version ?Bookmark and Share

Keywords:TSMC? Tsinghua? Powertech? chip design?

Taiwan Semiconductor Manufacturing Co. (TSMC) has revealed that it is open to the possibility of selling a stake in itself to Chinese investors. TSMC chair Morris Chang said he would consider the possibility "if the price is right and it is beneficial to shareholders." His comment comes as Chinese investors such as Tsinghua Unigroup show an increased interest in taking stakes in Taiwan chip companies.

Tsinghua last month bought a 25 per cent stake in Taiwan chip packager Powertech, and it also expressed an interest in buying shares in MediaTek, Taiwan's largest chip designer.

China and Taiwan have been political rivals since 1949, when an army led by the Communist Party overthrew China's ruling Nationalist Party, which fled to Taiwan in defeat. Relations are improving as the leaders of China and Taiwan met in Singapore on Nov. 7, the first such meeting in more than 60 years.

China, which imports more than 90 per cent of the semiconductors it uses to assemble mobile devices such as Apple's iPhone, last year started offering incentives to boost the development of its still paltry domestic chip industry.

Taiwan, which makes about a fifth of the world's semiconductors, restricts Chinese investments in its electronics businesses on concerns it will lose jobs and key technology. The Taiwan government doesn't allow Chinese investors to buy controlling stakes in Taiwan chipmakers and no Chinese investments are allowed in local chip design companies such as MediaTek.

Hefty price

Chang said that if a company wanted to take a 25 per cent stake in TSMC, it would come at a hefty price, costing at least $30 billion. TSMC, with a total market capitalisation of $112 billion, has shares listed on the Taiwan bourse and the New York Stock Exchange and is a core holding for global fund managers investing in the technology industry.

After Tsinghua said it is interested in taking a stake in MediaTek, Taiwan financial regulators responded by saying they are reviewing rules on investment by Chinese companies.

Chang also indicated that "there is no reason to ban investments coming from China."

Taiwan has eased rules on domestic chipmakers investing in China. The island's Ministry of Economic Affairs in September said it would allow Taiwan companies to invest as sole owners in a maximum of three 12in wafer fabs in China. Previous rules limited local chipmakers to investing as joint-venture partners or as sole investors in fabs with lagging-edge process technology.

TSMC negotiated with the Taiwan government earlier this year to ease the restrictions. The company, which has one 8in fab operating in China, last month said it is still evaluating the possibility of investing in a 12in fab in the world's most populous nation.

TSMC said it wants sole ownership of any fab operations it sets up in China for the sake of protecting its intellectual property and trade secrets.

- Alan Patterson
??EE Times

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