Taiwan Semiconductor Manufacturing Co. (TSMC) will soon start the application process to acquire an 8-percent stake in China-based Semiconductor Manufacturing International Corp. (SMIC) as part of a legal settlement, officials said Saturday. TSMC consulted the Investment Commission and the Industrial Development Bureau of the Ministry of Economic Affairs Friday about the related procedures, the officials said, adding that TSMC's application is expected to be approved. SMIC said last November that it had agreed to pay TSMC US$200 million in cash, and issue new shares -- representing approximately 8 percent of SMIC's shares -- and a warrant to settle a long-running legal dispute related to TSMC's trade secrets. If TSMC exercises the warrant within three years to acquire another 2 percent of SMIC shares at a HK$1.30 per share, TSMC's stake in SMIC will increase to 10 percent. Taiwanese chip makers were not allowed to buy into Chinese semiconductor companies before the new regulations took effect Feb. 26. The new regulations provide a legal basis for TSMC's acquisition of a 10-percent stake in SMIC. Under the new laws, Taiwanese companies will be allowed to acquire a full or partial stake in Chinese chip makers whose foundries are at least two generations behind the investing company's most advanced factory in Taiwan. 