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Philips, which 22 years ago started TSMC in partnership with the Taiwan government, today sold its remaining shares in the company.
The stake sold was 383m shares which, at their current market price of $10, should be worth around US$3.8bn. However Philips said the gain on the sale was €260m ($390m) and the value of the transaction was €450m.
Philips' investment in TSMC is one of the best investments ever made in the semiconductor industry.
In 1986, the Taiwan authorities were floating the idea of a silicon foundry in which the world's existing chip firms could invest in return for capacity. The offer was open to all, but only Philips took it up.
It is believed that Philips made no financial investment in the project, contributing instead its process technology, chip design capability, and its fab-building and manufacturing expertise.
Now TSMC is worth over NT$1.5trn (US$50bn) on the stock market, and Philips has not only been able to raise regular sums by selling off bits of its equity stake over the years, it has also had 20 years of dividends from its share of TSMC's profits.
Philips has never given a final reckoning of the returns it has reaped from its share in TSMC but past transactions suggest they are very significant.
In 2003, Philips raised €908m on a sale of TSMC shares in 2005 it raised a further €570m further sales raised €1.3bn and $6.5bn. Now it's about to pocket a final $390m.
This is why it has been one of the greatest investments in semiconductors ever made.
In addition to the share sales, Philips has had dividends. Philips never revealed how much these were but, last year, it revealed it had received a €223m dividend representing its share of TSMC's 2006 profits.
As well as share sales and dividends, Philips has had the benefit of a foundry relationship with TSMC, which has allowed Philips, Semiconductors, now NXP, to gradually scale back its expensive exposure to owning digital CMOS fabs.
TSMC has been beneficial to the Taiwanese semiconductor industry as the catalyst for a host of local design-based start-ups, and has benefited the worldwide chip industry in enabling the rise of the fabless companies, which now account for half of the revenues of the worldwide semiconductor industry.
(TSMC Fab 14 is pictured)
See also: Mannerisms, the blog of David Manners. Updated twice daily, it's the distinctive, entertaining, authoritative and never dull commentary on the semiconductor industry, from someone who knows. Sign up for the Mannerisms eNewsletter.