Wed, Nov 14, 2007 - Page 12 News List

TSMC board okays share buyback

BOWING OUT The reacquisition of a maximum of 800 million shares by TSMC is part of Royal Philips' strategy to exit the chip industry. The shares will be canceled


Taiwan Semiconductor Manufactu-ring Co (TSMC, 台積電), the world's biggest contract chipmaker, said yesterday that its board had approved an up to US$1.5 billion share buyback program to be implemented by the middle of January.

The buyback plan is the third-leg of a broader effort by TSMC to assist its biggest shareholder, Royal Philips Electronics NV, in gradually selling its holdings as it seeks to bow out of the chip-making industry.


TSMC said it would repurchase a maximum of 800 million shares at prices ranging from NT$43.2 to NT$94.2 per share -- from the open market rather than through a tender as agreed in March -- within the next two months.

"The market situation is different now," company spokesman Tzeng Jinnhaw (曾晉皓) said by telephone yesterday, meaning that the share repurchase program might cost the chipmaker less amid a recent tumble in the local stock market.

The repurchased shares will be canceled, TSMC said in a statement yesterday.


"We are optimistic about the share repurchase plan, as it will boost the chipmaker's return on equity and earnings per share," said Rick Hsu (徐稦成), a senior semiconductor merket analyst at Nomura Securities Co Ltd's Taipei branch.

The chip maker will likely conduct additional share repurchases over the next three years to maintain its current annual cash dividend per share, TSMC chief financial officer Lora Ho (何麗梅) said, adding that it would also cancel the repurchased shares.

Philips will engage in more share buyback programs, Ho said.


Philips will also consider additional sales to long-term financial investors vetted by Philips and TSMC.

The Amsterdam-based company holds an 8 percent stake in the Hsinchu-based chipmaker after it sold US$1.75 billion in shares to long-term investors -- including local insurer Cathay Life Insurance Co (國泰人壽) -- in March, and sold US$2.56 billion in TSMC ordinary shares in the form of American Depositary Shares in May.

Shares of TSMC rebounded 0.16 percent to close at NT$61.7 yesterday.

Shares of United Microelectronics Corp (UMC, 聯電), TSMC's main rival, rose 0.27 percent to NT$18.9.

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