Why TSMC (TSM) Is Reducing Stake in Vanguard Semiconductor Stock

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of Renaissance Technologies’ top semiconductor stock picks. TSMC shares have gained around 30% year-to-date and more than doubled over the past year.

On May 15, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), also known as TSMC, announced plans to reduce its stake in Vanguard International Semiconductor Corporation. The company said it plans to sell up to 152 million shares of Vanguard’s common stock to institutional investors. Vanguard operates as a specialty foundry.

The planned block trade represents about 8.1% of Vanguard’s fully diluted paid-in capital. TSMC expects its stake in Vanguard to fall to about 19% from roughly 27.1% currently after the sale. The company does not plan to sell additional Vanguard shares after this in the foreseeable future.

TSMC’s previous major sale of Vanguard shares was more than a decade ago. In 2015, TSMC announced plans to sell about 82 million shares of Vanguard stock. At that time, it said the sale would lower its holding in Vanguard to around 28.3% from 33.3%.

According to TSMC, the latest sale is part of its effort to focus resources on core business activities. The company explained that the proposed sale will not affect its strategic relationship with Vanguard. TSMC and Vanguard have certain production outsourcing and technology licensing arrangements.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) provides contract chip manufacturing. It is the industry leader in this field, producing diverse chip types for companies like Apple, Qualcomm, Nvidia, and Broadcom.

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