Koninklijke Philips Transfers TSMC Shares to Royal Philips

Taipei, Dec. 29, 2005 (CENS)--Three days before the conclusion of 2005,

Koninklijke Philips Electronics N.V. transferred all of its shareholding in Taiwan Semiconductor Manufacturing Co. (TSMC) in after-hours trading to its parent company Royal Philips Electronics in the Holland on Dec. 28, chalking up a transaction value of NT$120 billion, a record high of its kind.

Foreign and institutional investors remark that the move is designed mainly to evade the minimum tax burden system, scheduled to become effective January 1, 2006. Under the system, capital gains will be subject to the minimum tax. With the share transference, Philips, therefore, can save a huge tax of NT$12 billion.

As many as 1.9278 billion TSMC shares changed hands during the transaction, at the price of NT$62.3 per share, lower than the closing price of NT$63.5 that day. After taking over the 7.8% shareholding of TSMC from Taiwan Philips, Philips of Holland will see its shareholding increase to 16.5%, from the original 8.7%, much higher than the 7% holding by another major shareholder, the Development Fund of the Executive Yuan.

Philips Taiwan refused to comment on the massive shareholding transfer, so did Taiwan Semiconductor Manufacturing Co.

When Philips and the Development Fund joined hands to issue ADRs (American Depository Receipts) in August, they pledged not to sell any more share before the end of 2006. Market insiders once mistook the massive after-hours trading yesterday as a violation of the pledge on the part of the two shareholders.

After the share transfer, foreign shareholding in TSMC rose to 75.87%, the highest among all listed firms.