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TSMC to sell 5% of VIS to pocket NT$2 bil.

TAIPEI, Taiwan -- The board of Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) on Friday made the decision to sell its 82 million shares of Vanguard International Semiconductor Corporation (VIS, 世界先進), a leading specialty IC foundry service provider.

The board agreed to sell at NT$42.55 per share to rake in NT$3.49 billion, which is equivalent to 5 percent of VIS's net assets. TSMC forecast the deal would net NT$2.0459 billion for the company, to be listed as non-operating income on TSMC's financial statements. The transaction will be brokered by banks.

TSMC, the world's largest contract chip-maker, currently holds 38.3 percent of VIS's shares. After the sale, with a 33.3-percent share, TSMC will remain VIS's largest shareholder. TSMC said it does not plan to sell more VIS shares in the near future.

TSMC and VIS collaborate closely on knowledge transfer and foundry services. TSMC stressed that its partner relationship with VIS will be unaffected by the deal.

In 2007, TSMC agreed to purchase 10 percent of VIS's shares from the Executive Yuan's National Development Fund. The company made the purchase in an effort to keep the share price level, at a time when VIS was not yet in a mature state. As VIS's operations are now more streamlined, TSMC has decided to release some of those shares.

Foreign Brokers Optimistic

Foreign brokers said yesterday that due to strong demand for chips, TSMC will see its revenues grow by 15 percent in the second quarter compared to the first quarter.

As demand for mobile devices grow, TSMC's advanced 28-nanometer process will be more utilized, said Daiwa Securities, adding that an increase in the average selling price from using the more sophisticated 20-nanometer process will also contribute to the quarter-by-quarter growth.

Beginning in June, TSMC is expected to churn out an A8 processor for Apple Inc., supplying 50,000 wafers by the end of the year, Daiwa Securities said.

Citigroup Global Markets concurred with Daiwa Securities, saying that TSMC will see a 15-percent quarter-by-quarter growth, as the chip-maker builds up inventory to meet rising demand for 4G services. Citigroup has raised TSMC's target price from NT$133 to NT$137.

Barclays Capital shared similar optimism, predicting a 14- to 18-percent increase in sales in the second quarter, based on solid client demand from Apple, Qualcomm Inc. and MediaTek Inc. The brokerage firm raised its target price on TSMC from NT$139 to NT$160.

TSMC's share price closed up 0.42 percent at NT$120 on Friday. VIS's stock price closed down 1 percent at NT$44.8. TSMC's decision is expected to affect VIS's share price when the stock market opens on Monday.

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