Philips to pull out of stake in TSMC

By Colleen Taylor -- Electronic News, 3/9/2007

Further extracting itself from the semiconductor realm, Royal Philips Electronics today enumerated a multi-phased plan to exit from its current shareholding at Taiwan Semiconductor Manufacturing Co. Ltd. 

Philips currently owns 16.2 percent of TSMC share capital, with a current market valuation of approximately $8.5 billion.

In a statement released today, Philips said it intends to sell "in the near future" up to $1.75 billion worth of TSMC shares to "accommodate identified demand" from long-term financial investors in Taiwan. The company added that it has filed an application to do so with the Taiwan Stock Exchange.

Philips also intends to offer up to $2.5 billion worth of TSMC shares, in the form of American depositary shares (ADS), through a public offering in the United States without over-allotment option. The shares sold in this offering are expected to be listed on the New York Stock Exchange, Philips said. This offering would follow a TSMC board resolution to approve the conversion of TSMC common shares into ADSes on behalf of Philips; each ADS represents five TSMC common shares.

In addition, TSMC said today it plans to conduct a share repurchase via tender offer in 2007 on the Taiwan Stock Exchange to buy back up to approximately $1.5 billion worth of shares in TSMC, and cancel the repurchased shares, subject to TSMC board approval. Philips intends to participate in the share repurchase, and Philips' representative on the TSMC board of directors today resigned as a director. Philips will no longer maintain any board position at TSMC, the companies said.

"For Philips, selling our stake in TSMC is a logical consequence of our decision to exit the semiconductor business, to which end we made a first, significant step in 2006 when we sold a majority stake in our semiconductor division," Philips CFO Pierre-Jean Sivignon said the a statement.

This does not indicate the end of the relationship between Philips and TSMC, however. In January, NXP, the new incarnation of Philips' semiconductor division in which Philips still owns a nearly 20 percent stake, announced its exit from the Crolles2 Alliance, an industry group aimed at developing CMOS technology. NXP said it would instead team up with TSMC in the CMOS realm.