TSMC Buys 30 Percent Of Acer Semiconductor

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June 08, 1999 (12:33 PM EDT)

Taiwan Semiconductor Manufacturing Co. and the Acer Group announced in Hsinchu, Taiwan, an expansion of their strategicalliance, including TSMC's agreement to acquire 30 percent of Acer Semiconductor Manufacturing Inc. As part of the agreement, ASMI will be renamed TSMC-Acer Semiconductor Corp.

"Not only will TSMC purchase 30 percent of ASMI shares, but we will also provide full support to transform ASMI into another leading dedicated foundry," said Morris Chang, chairman of TSMC. "This agreement will help both companies establish a mutually complementary capacity support system and further strengthen the already strong alliance between TSMC and Acer."

TSMC, the world's largest pure-play silicon foundry, will purchase the ASMI shares for NT$5.47 billion ($170 million), or at NT$9.5 per share. Acer will continue to hold 30 percent of the ASMI shares.

TSMC and Acer said they plan to expand their collaboration in IC manufacturing technology, capacity support, and management. The new agreement stipulates TSMC will manage the newly formed corporation turning it into a dedicated foundry company. As a result, the future president of ASMI will be assigned by TSMC, and the new chairman will be selected from TSMC's four director positions.

To position itself as a dedicated foundry, ASMI said it plans to hold a cash offering of NT$8 billion to NT$10 billion ($240 million to $310 million) to purchase new equipment to adjust parts of its operation line to logic-based processes. The company said it expects a monthly capacity for 0.25- and 0.22-micron technologies will be increased to 38,000 eight-inch wafers by the end of 2000.

Acer's chairman Stan Shih said a portion of ASMI's capacity will continue to serve the internal needs of the Taiwan computer maker. He said the move to create a new foundry company with TSMC will enable the Acer Group to concentrate more of its efforts on developing PCs, peripherals, and other key components in its business. To do that, Acer this week announced it was entering into a seven-year technology and procurement agreement with IBM.

"After TSMC takes the lead in ASMI's management, Acer can concentrate on aggressively developing its PC, peripherals, and key components business and exploring opportunities in intellectual property and digital service," Shih said. "Also, Acer can focus on reinforcing its IC design innovation to create new opportunities for ASMI to manufacture ICs. At the same time, we will work closely with TSMC to leverage each other's strengths, give mutual support, and enhance the competitiveness of both companies. This alliance is sure to increase Taiwan's influence in the global IT industry."

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