Semiconductor Manufacturing International Corp (SMIC,
Shares of the Shanghai-based chipmaker are likely to be listed in the US and Asia, Tan Lip-Bu, chairman and founder of Walden International Investment Group, a San Francisco-based venture-capital company, said in an interview in Singapore. The chipmaker is ranked No. 5 by sales, behind market leader Taiwan Semiconductor Manufacturing Co (
SMIC joins Grace Semiconductor Manufacturing Corp (宏力半導體), also based in Shanghai, in raising funds to invest in production as the chip industry recovers from a near three-year slump. Global chip sales will rise 10 percent this year to US$155 billion, according to the Semiconductor Industry Association.
"This company has a chance to really build and be the world's number two," Tan said. "We have more orders than we can ship. It's profitable and it's got a strong customer base."
Walden International didn't say how much of Semiconductor Manufacturing it owns.
Tan, who traveled to China over the weekend to visit the chipmaker's plants, said he had spoken with arrangers Credit Suisse First Boston and Deutsche Bank AG, Europe's second-biggest bank by assets, about the company's first-time share-sale plans.
SMIC raised US$630 million in a private share sale in September to boost production capacity at its Shanghai plant.
Grace Semiconductor said in the same month it plans to raise US$3 billion to expand production 10-fold by selling shares to the public by the first half of 2005.
The Shanghai company ranked fifth in the made-to-order chip industry in the first half of this year, with a market share of about 2 percent, compared with 25 percent for UMC, according to research firm IC Insights.
Investors say it's possible to close the gap.
"It is reasonable to say so, but how long it will take to achieve that is the question," said Pedro Tai, who helps manage more than US$200 million for ABN Amro Asset Management Taiwan. "If someone makes a mistake from now on -- and they are doing the right thing -- it is possible."
Motorola Inc on Oct. 24 agreed to swap a US$1 billion chip factory in Tianjin, China, for a stake of more than 10 percent in SMIC. State-backed Shanghai Industrial Holdings Ltd, which owns 13.6 percent, remains the biggest shareholder.
The Tianjin factory joins three SMIC plants in Shanghai that can produce a combined 40,000 8-inch wafers a month. The company is also building a plant in Beijing, where it plans to make 12-inch wafers by the second half of next year.
The bigger wafers yield more than double the number of chips that can be made from 8-inch discs. In March, Infineon Technologies AG, Europe's second-largest chipmaker, expanded an agreement with SMIC, allowing it to use Infineon's 12-inch technology.
Chips sales in China will jump 23 percent to US$28.4 billion this year, accounting for two-fifths of sales in Asia excluding Japan, Gartner Inc forecasts. China's share will rise to 46 percent in 2007 as more manufacturers move output to Chinese plants, the researcher said.
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