Shares of Taiwan-based Vanguard International Semiconductor (TWO:5347) slid sharply in Taipei trade Monday after chip powerhouse TSMC (TSM) disclosed plans to reduce its equity stake in the company.
Vanguard stock dropped about 10% to T$159.0, reflecting immediate market reaction to TSMC’s planned disposal.
On Friday, TSMC said it intended to sell up to 152 million Vanguard shares via a block trade to institutional investors. That transaction would shrink TSMC’s stake in Vanguard to 19% from 27.1%. Based on Friday’s closing prices, the sale was valued at approximately T$26.8 billion, or about $850 million.
TSMC also stated it had no plans to sell additional Vanguard shares beyond this transaction and emphasized that the sale would not alter the companies’ strategic relationship. The firms’ ongoing ties include licensing of gallium nitride technology and outsourcing of interposer production, according to TSMC’s statement.
The planned block trade and resulting reduction in TSMC’s ownership come into focus amid the sell-off in Vanguard’s shares on Monday. Market participants could interpret the move in a range of ways; the immediate effect in Taipei was a near 10% decline in Vanguard’s share price.
The disclosure quantifies both the scale of the stake reduction and the approximate market value of the shares on the last trading day before the announcement. TSMC’s public comments sought to limit concern by noting that the companies’ strategic relationship would remain in place and that there were no additional planned disposals.
Investors and analysts following the semiconductor sector will likely monitor any further developments, though TSMC’s statement indicates the company does not intend to pursue additional sales at this time. The specifics disclosed include the number of shares to be sold, the method - a block trade to institutional investors - and the expected post-sale ownership percentage for TSMC.
For now, the concrete items on record are the planned 152 million-share block trade, the reduction of TSMC’s stake to 19%, the approximate T$26.8 billion ($850 million) valuation as of Friday’s close, and TSMC’s assurances regarding the strategic partnership and its lack of plans for further share disposals.