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Taiwan Reportedly to Cut Stake in Taiwan Semiconductor

The shares are hammered in Asia, dragging down United Microelectronics.
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Asian semiconductor makers were in for a rough session Wednesday following a report that Taiwan's government planned to reduce its stake in

Taiwan Semiconductor

(TSM) - Get Taiwan Semiconductor Manufacturing Co. Ltd. Report

by roughly half.

Taiwan Semi's stock slipped 7% in overseas trading after

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reported the Taiwan Development Fund will cut its stake in the world's biggest chip manufacturer to 4.1% from 7.3% through sales in U.S. markets. The fund will unload the roughly $1.2 billion slug in order to help fund a government budget deficit.

United Microelectronics

(UMC) - Get United Microelectronics Corp. Report

, the second-biggest foundry, was also lower overseas.

The news comes at a difficult time for the shares, which had been falling steadily before rising Tuesday on a report showing a sharp rise in worldwide semiconductor orders in April. Taiwan Semi shares fell about 15% in the U.S. last week alone, only slightly more than the decline in United Micro over the same period.