Philips Electronics, an original investor that helped get Taiwan Semiconductor Manufacturing (TSMC) started over 20 years ago, sold its remaining shares in the chip maker on Thursday.
Philips sold 383 million TSMC shares in a block trade to long-term investors, the company said in a statement.
"As a result of this transaction, Philips no longer owns a stake in TSMC," Philips said.
The European company was instrumental in the launch of TSMC, now the world's largest contract chip maker.
Morris Chang, the founder and chairman of TSMC, successfully convinced Philips to invest in TSMC and use its factories to manufacture Philips' chips, making the European giant an original investor and early customer.
Philips' name was just as important as its money to TSMC. Adding Philips to the list of TSMC investors helped convince government officials in Taiwan, other investors and other potential customers to work with and invest in TSMC early on.
Since then, however, Philips has transformed its business, exiting the chip industry by selling off most of its chip division in 2006 to private equity investors, which renamed it NXP Semiconductors.
TSMC brought a new model to the chip world in the 1980s called "foundry," or contract chip manufacturing business. The Taiwanese company proposed to specialize in chip manufacturing so that customers could focus on chip design, the aligning of transistors on silicon to make them perform a function.
It was an important development. Prior to TSMC, when a small chip design company needed a manufacturer, it only had two alternatives: buy a billion dollar chip factory or ask a big company such as Intel or Motorola to manufacture the chips for them. The trouble was, big companies needed their factories for their own use, so they only rented production lines to smaller designers when business was slow.
But once TSMC opened, chip designers had a partner they could rely on, and the chip design industry has flourished ever since.
Companies such as mobile phone chip giant Qualcomm, graphics chip maker Nvidia and hard disk drive chip provider Marvell Technologies would have very different businesses today without contract chip makers such as TSMC. None of these companies owns chip factories, instead farming out production and concentrating on chip research and development.