Taipei said June 29 it has given chip giant Taiwan Semiconductor Manufacturing Co the go-ahead to take a 10% stake in Chinese rival Semiconductor Manufacturing International Corp.
The deal is part of the settlement of a legal dispute between TSMC, the world's largest contract microchip maker by revenue, and SMIC over the latter's alleged theft of trade secrets, the government said on June 28.
After losing a lawsuit in November SMIC agreed to pay TSMC US$200 million cash and issue it new shares equal to about an 8% stake as well as a warrant for another 2%.
However, because of restrictions imposed by Taipei on investments in Chinese chip makers at the time, TSMC was not immediately able to take the shares.
But in February this year the government relaxed restrictions, allowing microchip makers to merge or invest in their Chinese counterparts, paving the way for an application for the stake by TSMC in March.
The row started in 2006 when the Taiwan chip maker said SMIC's alleged theft of trade secrets had caused it more than one billion dollars in damages.
Copyright Agence France-Presse, 2010
