Thu, Jul 10, 2003 - Page 11 News List

TSMC's ADR sale raises US$822 million

SHARE BONANZA The government cashed in part of its stake in the chipmaker, part of its effort to fill treasury coffers to fund economic-revitalization plans

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Taiwan Semiconductor Manufac-turing Co (TSMC, 台積電), the world's largest supplier of made-to-order computer chips, said the government cut its stake as part of an US$822 million sale, taking advantage of rising technology stocks to plug its deficit.

TSMC shareholders sold about 79 million American depositary receipts at US$10.40 each, a 0.7 percent discount to yesterday's US$10.47 closing price.

The Cabinet's Development Fund sold 97.8 percent of the units, reducing its stake to 7.65 percent from 9.56 percent, the company said.

The chipmaker's ADRs are up 60 percent this year as rising orders from makers of computers and mobile phones made its plants the busiest they have been in more than two years.

NEC Corp, Seiko Epson Corp and other Asian computer-related companies have raised more than US$3 billion selling shares in the past month.

"The market's going crazy for technology stocks again," said David Chapman, who helps manage US$650 million at Towry Law Asia HK Ltd.

"People are chasing the technology stocks concerned they might miss the recovery," he said.

NEC Corp, Japan's second-largest maker of semiconductors, has risen 49 percent since June 16 when the company revived plans to sell shares in its chip unit, NEC Electronics Corp.

NEC increased the size of the sale to US$1.2 billion on July 1. The sale closes on Monday.

Semiconductor prices will rise in the second half as global chip shipments increase 15 percent to a record 90.3 billion units this year, market researcher IC Insights said yesterday.

The TSMC sale will help the government finance a NT$237.4 billion (US$6.9 billion) budget deficit.

President Chen Shui-bian (陳水扁) plans to increase spending to meet his goal of cutting the jobless rate to 4.5 percent by the end of this year from 5.2 percent in May.

The government budgeted NT$128.4 billion of extra spending this year to revive the economy. To fund the spending, the government will next week sell about US$2 billion of ADRs in the state-run Chunghwa Telecom Co (中華電信). It also plans to sell stakes in lenders Hua Nan Financial Holdings Co (華南銀行) and Chang Hwa Commercial Bank (彰化銀行).

"The government's trying to get out of enterprises," said Michael Ding (丁予嘉), who counts shares in TSMC among the equivalent of US$3.2 billion he helps manage for International Investment Trust Co (國際投信).

"The deficit isn't small. The government is going to keep selling stakes," he said.

The arrangers of TSMC's sale, Goldman Sachs Group Inc and Merrill Lynch & Co, have an option to sell a further 11.8 million ADRs, depending on demand. That would bring the sale size to as much as US$944 million.

"People are worried the stock might have rallied too much too fast," said Reming Yu, who oversees the equivalent of US$4.2 billion in stocks at Prudential Securities Investment Trust Co (保誠投信), including TSMC.

One depositary receipt is equivalent to five common shares, which closed on Tuesday at NT$62 (US$1.80) in Taipei -- representing a discount of about 13 percent to the ADRs. ADRs of some Taiwanese companies trade at premiums to the underlying shares because the government restricts overseas investment in shares sold on the domestic market.

On Monday, the company said its use of production capacity rose to 86 percent in the second quarter, the highest since the fourth quarter of 2000, when the rate exceeded 100 percent.

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