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 (
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 (
"The government's trying to get out of enterprises," said Michael Ding (
"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.
Investors have said they are still concerned about whether spending for electronics will recover later this year. TSMC also faces increased competition.
Nvidia Corp, the world's biggest maker of graphics chips, last year accounted for about a fifth of the company's sales. In March this year, TSMC lost its role as Nvidia's sole supplier when it signed a contract with International Business Machines Corp.
Rising investor confidence in computer-related companies may improve the fundraising climate for companiess such as Singapore-based Chartered Semiconductor Manufacturing Co (特許), which has been unprofitable for nine straight quarters.
"If you're looking at better times ahead, you're more willing to absorb fund-raising," said Lim Chung Chun, a fund manager with Accretion Asset Management, which holds shares of TSMC.
Chartered Semiconductor has tapped investors four times since 1999. It said in March that it will need to raise more money to complete plans for purchasing manufacturing equipment and research and development for next year.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)