TSMC shareholders to sell US$1.2b stake

Shareholders in Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chipmaker, have filed with the United States securities regulator to sell US$1.28 billion in existing scrip in the form of American depositary receipts.

The shareholders - which include Philips, the government-owned Taiwan Development Fund and several top management officials, including the 'godfather' of the Taiwan's chip industry Morris Chang - plan to sell 150 million ADRs.

TSMC shares closed at US$8.59 per ADR on Wednesday. One ADR represents five of the local shares.

Philips will hold 16.3 per cent of TSMC after the share sale, down from 18.7 per cent. The development fund's holdings will drop to 6.3 per cent from 7.3 per cent.

Mr Chang, who stands to gain as much as US$30 million, will see his shareholding drop to 0.46 per cent from 0.53 per cent. Goldman Sachs and JP Morgan are arranging the share sale. No price has been set for the ADRs.

Such ADR sales have been common in recent years as Philips looks to diversify its holdings and the Taiwanese government raises money to plug its budget shortfalls.

The Taiwanese government has preferred to sell TSMC shares abroad to assuage dilution fears at home. In addition, the ADRs typically fetch a premium to the underlying shares due to rules which restrict foreign participation in Taiwan's stock market.

But this premium had dwindled to just 4.77 per cent as of yesterday as Taiwan has made it easier for foreign investors to buy local shares.