Tue, Nov 21, 2006 - Page 11 News List

Government to sell TSMC shares

CUTTING DOWN Part of the government's strategy to lower fiscal deficit involves selling millions of outstanding shares in the semiconductor industry


The government is planning to sell more shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and an affiliate of the world's biggest contract chipmaker next year to fund the national coffers, a government official said yesterday.

The Cabinet's Development Fund (開發基金), a funding stakeholder of TSMC, said it planned to sell another 80.7 million TSMC shares, or 0.31 percent of the chipmaker's 25.8 billion in outstanding shares, next year.

As part of the budget proposal for next year, the government fund also planned to sell 185 million shares of local chipmaker Vanguard International Semiconductor Corp (世界先進), or 11.28 percent of the total 1.64 billion outstanding shares.

Stock prices of TSMC and Vanguard declined 0.32 percent and 1.97 percent, respectively, to NT$62.2 and NT$22.4 yesterday, underperforming the 0.03 percent gain on the benchmark TAIEX index.

"The fund plans to receive a combined NT$6.4 billion [US$194.3 million] in net gain from the share sales next year based on our budget proposal," James Ho (何俊輝), an executive deputy director of the fund, said in a phone interview.

To minimize the adverse impact on the TSMC stock price, the government could sell those shares on the overseas market as it has done in the past.

"The share sale of TSMC is quite small, compared to similar sales in the past. And we will sell less and less in the future," Ho said.

The government fund's shareholding in TSMC fell to 6.5 percent after the fund's last share offering in the form of American Depositary Receipts (ADR) in August last year, Ho said.

TSMC's depositary receipts remained unchanged at US$9.98 on the New York Stock Exchange last Friday.

During the overseas share offering, the shareholders of TSMC, including Royal Philips Electronics NV and the Development Fund, as well as the company's senior executives, sold 151.7 million ADRs at US$8.60 each.

Each ADR represents five common shares.

The fund held a 48 percent stake in the chipmaker in 1987, when the company established.

The government fund has a 16 percent stake in Vanguard, which is 27 percent owned by TSMC, according to Ho.

The share sales would be a small part of the government's greater efforts to narrow the long-term fiscal deficit.

The government hopes to balance its budgets by 2011.

The estimated fiscal deficit is forecast to edge down to more than NT$100 billion this year from NT$102.5 billion last year.

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