Bloomberg News

TSMC Climbs After Agreeing to Buy 5% Stake in ASML: Taipei Mover

August 06, 2012

Taiwan Semiconductor Manufacturing Co. (2330) climbed to its highest in a month after agreeing to invest 1.11 billion euros ($1.38 billion) in ASML Holding NV (ASML), the world’s largest chip-equipment maker, and cooperate on research.

TSMC gained as much as 2.1 percent to NT$81.50, the highest since July 3, before trading at NT$81 as of 12:41 p.m. in Taipei. The benchmark Taiex (TWSE) index, of which TSMC is the largest member, rose 1.2 percent.

TSMC will spend 838 million euros to take a 5 percent stake in Veldhoven, Netherlands-based ASML and pay a further 276 million euros over five years for next-generation manufacturing technology, it said yesterday. The Hsinchu, Taiwan-based company joins Intel Corp. in co-customer investment in ASML to secure access to chipmaking technologies including extreme ultraviolet lithography.

“It is a long-term positive for TSMC to join ASML’s co- customer investment program since it highlights the availability of extreme ultraviolet technology and equipment,” Patrick Liao and Jason Ho, technology analysts at Nomura Holdings Inc., said in a note today. TSMC’s investment implies it will have “joint intellectual property rights of the critical lithography R&D in the future,” they said. The analysts rate the stock buy with a target price of NT$105.

The agreement with TSMC brings the amount of customer co- investment to 20 percent of equity and the chip gear maker is in talks with other customers to bring the total to 25 percent, ASML said in a statement.

TSMC, which sold NT$18.9 billion ($631 million) of bonds at the end of June, had a total of NT$178 billion in cash as of June 30, according to its second-quarter cash flow statement. The proceeds from the last bond sale will be added to its balance sheet during the current period.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net.


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