Investors inundate Chinese company with share orders

Semiconductor Manufacturing International Corp (中芯國際集成電路), China's biggest chip-maker, will increase its initial share sale by 12 percent after investors ordered six times the shares available, said bankers close to the sale.

The company may raise as much as HK$14 billion (US$1.8 billion) selling about 5.15 billion shares at between HK$2.41 and HK$2.72 each. That's equivalent to between US$15.50 and US$17.50 for its American depositary receipts, said the bankers who declined to be identified. It first offered 4.545 billion shares.

Shanghai-based Semiconductor Manufacturing needs the funds to more than triple its monthly capacity to 170,000 silicon wafers by 2005 and to fund the production of China's first 12-inch wafer plant in Beijing. The sale would be the world's third-biggest IPO this year. The shares will start trading in New York on March 17 and Hong Kong the next day.

The company is still offering 3.03 billion new shares while existing shareholders will increase the number of shares they are selling to 2.12 billion from 1.515 billion shares. They may sell an additional 773 million shares depending on demand, the bankers said. Each ADR represents 50 shares.

Semiconductor Manufacturing needs to expand to compete with rivals such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world's biggest supplier of made-to-order chips. The company reported its first profit in the fourth quarter and a lack of earnings history makes the offer less attractive compared with its peers, investors such as Bryan Yip at Standard Life Investments Ltd have said.

United Microelectronics Corp (聯電), the world's second-biggest supplier of made-to-order computer chips, is trading at twice book value, according to Bloomberg data. Its profit was NT$14 billion ($419 million) last year. Larger rival TSMC, whose profit was NT$47.3 billion last year, is trading at 4.4 times its book value, according to Bloomberg data.