Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said yesterday it was seeking permission from the government to take a stake of up to 10 percent in China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際).
TSMC, the world’s largest contract chip maker, plans to take the stake as part of a settlement reached in November that put an end to a lengthy dispute between the two companies over SMIC’s alleged theft of trade secrets.
“According to the agreement, SMIC will issue an 8 percent stake to TSMC without payment. Furthermore, TSMC has an option to acquire up to 2 percent in the Chinese company,” TSMC spokesman Tzeng Jin-hao (曾晉皓) said.
Tzeng said TSMC would buy the optional stake for HK$1.30 (US$0.17) per share under the agreement.
The row between TSMC and SMIC started in 2006 when the Taiwanese chipmaker said its Chinese rival’s alleged theft of trade secrets had caused it more than US$1 billion in damages.
Although the settlement in November put an end to the dispute, it did not immediately benefit TSMC, as restrictions imposed by the Taiwanese government barred it from investing in Chinese chipmakers.
However, last month the government relaxed restrictions, allowing chipmakers to merge or invest in their Chinese counterparts, paving the way for TSMC’s application.
On top of the stake, SMIC will pay US$200 million in cash to settle the dispute.
The semiconductor market is predicted to pick up this year after a drop in revenues over the past two years.
Global semiconductor sales fell 10.5 percent last year, the first time revenue in the industry declined for two straight years, researcher Gartner Inc said.
Worldwide chip sales dropped to US$228.4 billion last year, down US$26.8 billion from a year earlier, Gartner said in an e-mailed statement yesterday.
“After an unprecedented decline in the fourth quarter of 2008 and the first quarter of 2009, sequential quarterly revenue growth for the industry overall was very strong in the last three quarters of 2009,” Peter Middleton, a Gartner analyst, said in the release.
“As a result, 2009 performance overall was much milder than initially feared in the aftermath of the financial crisis,” Middleton said.
Last month, Gartner predicted that worldwide semiconductor revenue would rise 20 percent to US$276 billion this year.
The industry “performed much better than expected” in the second half of last year, “setting the stage for strong 2010 growth against weak comparables,” Gartner said.
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