Chairman Morris Chang (張忠謀) will expand his role to include the CEO position from Friday, the Hsinchu, Taiwan-based company said in a statement Thursday. Tsai will become president of the company’s New Business Development Organization, according to the statement.

Tsai, 58, who was promoted to company chief executive in July 2005, also stepped down as its president, Chang said in a press briefing yesterday. The company doesn’t plan to appoint a new president, he said.

Chang said leading the New Business division reflects Tsai’s abilities as the “best CEO” and that the change in the role shouldn’t be viewed as a demotion. Tsai may have been ousted because of his role in cutting the company’s workforce, said Tiffany Chen, a KGI Securities Co. analyst in Taipei. TSMC said Wednesday that about one-third of the “several hundred” laid-off workers who were invited back accepted the offer.

“Tsai has been known for his aggressive style and he encourages competition with employees, and his handling of job cuts triggered the management shuffle,” KGI’s Chen said.

Taiwan Semiconductor, which manufactures chips for Intel Corp. and Nvidia Corp., cut its workforce by 6.2 percent to 19,537 over the nine months to March 31, according to company filings. It ended unpaid leave in April as it forecast sales this quarter would climb as much as 87 percent from the previous three-month period.

Former TSMC workers staged protests for several times earlier this year against “forced unpaid leave and sacking” in front of the Council of Labor Affairs and Chang’s residence. Chang promised last month to hire back laid-off employees and cited earlier measures of employee dismissal as “negligence of management”.