Former minister of finance nominated to chair Vanguard

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and the Cabinet's Development Fund have jointly nominated former finance minister Lin Chuan (林全) as chairman of Vanguard International Semiconductor Corp (世界先進), TSMC and the fund announced in a joint statement released late on Friday.

TSMC, the world's largest made-to-order chipmaker, hoped the nomination of Lin will help improve the corporate governance at Vanguard, a specialty integrated circuit foundry service provider in Hsinchu.

TSMC and the Development Fund are Vanguard's two largest shareholders. Currently, TSMC holds a 27.2 percent stake in Vanguard, while the Development Fund owns 26.9 percent, the statement said.

Vanguard started out as a subcontractor for TSMC manufacturing logic and mixed-signal products in 1999, and began to transform itself from a dynamic random access memory (DRAM) manufacturer into a foundry service provider in 2000. The company completely terminated its DRAM production and became a pure-play foundry company in 2004, Vanguard said on its Web site.

Lin, who stepped down as minister of finance in late January to pursue a career in the private sector, has no stock in Vanguard nor any affiliation with the nation's high-tech companies.

His nomination was unexpected and came after he spearheaded a plan to levy a minimum business income tax last year in view of more than 4,000 high-tech firms which enjoyed tax incentives and ended up paying no tax at all, resulting in an annual tax-income loss amounting to around NT$50 billion (US$1.58 billion).

In the statement, TSMC said that it would seek an appropriate external candidate to replace Paul Chien (簡學仁) as Vanguard's president.

Chien joined Vanguard as vice president of sales and marketing in 1995. He was promoted to serve as president in 2000 and took over as chairman from Morris Chang (張忠謀) in 2003.

For nearly three years, Chien acted as both chairman and president of Vanguard, but incidents of board infighting began to undercut his authority last year. On Dec. 2 last year, he handed over his presidency to the board and retained his chairmanship. On April 4 he resigned from the chairmanship after he was reappointed as Vanguard's president by the company's board.

TSMC and the Development Fund said that they have also nominated a number of candidates for Vanguard's board of directors and supervisors, and that they hoped the nominees would win majority support at Vanguard's annual shareholders' meeting on Thursday.

"The board of directors sets a corporation's development goals, supervises the management team and ensures shareholders' rights and interests. A solid board of directors is the cornerstone of good corporate governance," the statement read.