SMIC gets approval to sell stock

Semiconductor Manufacturing International Corp (SMIC, 中芯國際集成電路), China's biggest chip-maker by sales, won approval from Hong Kong's securities regulator to sell about US$1 billion of its stock, said a person involved in the transaction.

The Shanghai-based chipmaker also plans to sell shares publicly in the US and plans to file an application to the New York Stock Exchange this month, said the banker, asking not to be identified. The share sale may increase to US$1.5 billion, depending on the size of stake the existing shareholders sell, the banker said.

Semiconductor Manufacturing, about a tenth owned by Motorola Inc, needs funds to build more plants to challenge Taiwanese manufacturers such as Taiwan Semiconductor Manufacturing Co (台積電), the world's biggest supplier of made-to-order chips.

Global semiconductor sales will jump 19 percent this year after rising 18 percent to US$166.4 billion last year, helped by demand for chips used in mobile phones, DVD players and other devices, according to the Semiconductor Industry Association.

China, which takes up over a quarter of Asia's US$60 billion total, will increase its share to about half by 2008, researcher IDC forecast. Computer chip sales in China will jump 23 percent to US$28.4 billion this year, research company Gartner Inc forecasts.

"The IPO should be generally welcomed as demand for chips in China is still growing," said George Wu (吳裕良), an analyst at Primasia Securities Co in Taiwan.

The share sale comes as the Taiwanese company filed a suit in the US last month seeking unspecified damages, after the Shanghai-based Semiconductor Manufacturing hired more than 100 of its employees and allegedly stole trade secrets and infringed patents.

"This kind of legal process takes years," Wu said.

Semiconductor Manufacturing raised US$630 million in a private share sale in September to boost capacity. Other shareholders of the company include H&Q Asia Pacific Ltd, a unit of J.P. Morgan Chase & Co, and Temasek Holdings Pte, the investment arm of the Singapore government.

Semiconductor Manufacturing is building a factory in Beijing to make 12-inch wafers by the second half of next year.

Chip sales in China will account for two-fifths of this year's total in Asia outside Japan, as more manufacturers move production there. China's share of the chip market will rise to 46 percent in 2007, Gartner said.

Credit Suisse First Boston and Deutsche Bank AG were hired to arrange the sale. Elizabeth Rudall, a spokeswoman at Credit Suisse, and Michael West at Deutsche Bank declined to comment.

Semiconductor Manufacturing spokeswoman Sarina Huang didn't return phone calls seeking comment.