Tue, Sep 30, 2003 - Page 11 News List

TSMC stake to be sold: legislator

FINANCE PFP Legislator Thomas Lee said the government plans to sell shares of the semiconductor giant, but the body controlling the shares disputed the claim

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The government plans to sell a 3 percent stake in Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the nation's biggest company by market value, for as much as NT$45.9 billion (US$1.4 billion) to help plug a budget deficit, a People First Party (PFP) lawmaker said.

The National Development Fund (開發基金) under the Cabinet aims to sell the shares for NT$71.50 each, an 8 percent premium to yesterday's closing price, PFP Legislator Thomas Lee (李桐豪) said, citing information obtained from the government.

The stake will be sold next year, according to an official at the state-owned fund who declined to give a price or be identified.

The government is planning more asset sales to finance spending as President Chen Shui-bian (陳水扁) prepares for an election next March. The sale, which would raise almost as much again as two previous government sales of TSMC shares last year and this year, may be voted down by legislators, investors said.

"This would have to pass the legislature," said Michael Ding (丁予嘉), who counts shares in TSMC among the equivalent of US$4.2 billion at International Investment Trust Co (國際投信). "We anticipate this will create some quarrels."

Shares of the world's biggest supplier of made-to-order chips have surged 69 percent this year as technology shares rebounded worldwide on expectations of increased spending on personal computers and other electronic products. The Philadelphia Semiconductor Index of 18 chipmaker stocks has gained 47 percent this year.

The government's sale of an US$822 million stake in TSMC in the US on July 9 didn't halt the rally in the stock, which has risen 10 percent since then. The shares gained NT$0.50, or 0.8 percent, to NT$66.50 on the TAIEX yesterday.

The planned sale of 640 million shares would cut the government's stake in TSMC to 4.6 percent from 7.7 percent, Lee said. The government pared its stake to 9.56 percent in the July sale, after selling a 1.5 percent stake in the company for US$871 million on Feb. 1 last year.

But the management committee of the development fund later yesterday disputed Lee's claim, saying the government plans to sell only about 600 million shares in the chipmaker next year, while the date of the sale will depend on market conditions, the fund said in a statement.

Vice Premier Lin Hsin-yi (林信義) said yesterday that the National Development Fund has been selling off its TSMC shares over the past few years, as the government has decided to withdraw its investments without affecting the stability of the stock market.

TSMC used 86 percent of its production capacity in the second quarter, the busiest its plants have been since the fourth quarter of 2000.

Lin said the government considers that its mission to support TSMC in the company's initial stages has been completed and now is the time to divest.

TSMC, which posted a 32.8 percent rise in sales for July and August from a year ago, may use as much as 100 percent of its production capacity in the fourth quarter, Citigroup Inc analyst Andrew Lu (陸行之) said in a report this month.

Based on yesterday's closing price, the shares to be sold would be worth NT$42.6 billion. The government may be able to raise more by selling shares overseas.

Neither Lee nor the development fund official said whether the government plans to sell shares overseas.

Lee said he opposes the TSMC sale because the proceeds will help to finance public spending designed to secure Chen's re-election. The government has increased spending on social welfare at the expense of public works projects, he said.

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