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TSMC: Obtaining SMIC Shares Needs Taiwan Government Approval

TAIPEI -(Dow Jones)- Taiwan Semiconductor Manufacturing Co. (TSM) needs to get approval from the Taiwan government to obtain shares in China's Semiconductor Manufacturing International Corp. (SMI) because of restrictions on Taiwan companies owning stakes in mainland China companies, TSMC spokesman J.H. Tzeng said Tuesday.

The comment comes after SMIC said Tuesday it had agreed to pay TSMC US$200 million in cash, and issue it with new shares and a warrant to settle a long- running legal dispute. TSMC's stake in SMIC would be about 10% if it exercises the warrant.

Tzeng declined to elaborate on the size of the potential stake in SMIC because of the need for government approval and because "we may not execute the warrants immediately."

"If we get the Taiwan government's approval, we will be a solely passive investor (in SMIC)," Tzeng said.

-By Alex Pevzner, Dow Jones Newswires; 8862-2502-2557; alex.pevzner@ dowjones.com

  (END) Dow Jones Newswires
  11-10-090530ET
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