TSMC Seeks Approval to Take Stake in China Firm

Wants 10% of China's Semiconductor Manufacturing International Corp.

Taiwan Semiconductor Manufacturing Co. said on March 29 it is seeking permission from the island's government to take a stake of up to 10% in China's Semiconductor Manufacturing International Corp.

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% stake to TSMC without payment. Furthermore, TSMC has an option to acquire up to 2% in the Chinese company," TSMC spokesman J.H. Tzeng said.

The row between TSMC and SMIC started in 2006 when the Taiwan chip maker said its Chinese rival's alleged theft of trade secrets had caused it more than one billion dollars in damages. Although the November settlement put an end to the dispute, it did not immediately benefit TSMC, as restrictions imposed by the Taiwan government barred it from investments in Chinese chip makers.

However, in February this year the Taiwan government relaxed restrictions, allowing microchip makers 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.

Copyright Agence France-Presse, 2010

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