LONDON — The Taiwanese Ministry of Economic Affairs (MOEA) has approved an
application by the world's largest foundry, Taiwan Semiconductor Manufacturing
Co. Ltd., to take up a 10 percent stake in Chinese rival Semiconductor
Manufacturing International Corp., according to reports.
MOEA issued a statement Monday (June 28) saying that TSMC's stake in SMIC is
acceptable and does not contravene the need to maintain a technology advantage
over China and to protect Taiwanese workers, the report said.
TSMC's holding comes as a result of an out-of-court settlement of a legal
dispute between TSMC and SMIC (see TSMC, SMIC settle bitter suit). TSMC had alleged that
SMIC had been using its trade secrets and infringing patents.
Under the terms of the settlement, SMIC agreed to pay TSMC $200 million plus
stocks equivalent to 8 percent holding in SMIC and warrants to purchase a
further 2 percent. However, TSMC was not able to take up the stock or exercise
the warrants while the Taiwanese government maintained restrictions on Taiwanese
companies investing in China. In February the government in Taiwan relaxed
TSMC filed the application in March, after the government relaxed restrictions on high tech
investment in China.
Under the latest investment regulations, Taiwanese chipmakers can acquire
full or partial stakes in Chinese chipmakers whose manufacturing capabilities
are two generations or more behind the investors' most advanced facilities in
Taiwan, a Focus Taiwan report.