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Chinese chipmaker goes public

Semiconductor Manufacturing International Corp (SMIC,中芯國際集成電路), China's first chipmaker to sell shares publicly, raised HK$14 billion (US$1.8 billion), the maximum sought from its Hong Kong initial public offer.

China's biggest chipmaker and its shareholders priced the 5.15 billion shares on offer at HK$2.72 each, the top of the range earlier marketed to investors, a banker involved in the sale said.

The Shanghai-based company had marketed the sale to investors prior to this week's slump in the NASDAQ Composite Index and the Hang Seng China Enterprises Index, garnering orders for more than six times the stock available last Friday.

Investors, including Samir Mehta, who helps manage the equivalent of US$3 billion for Lloyd George Management in Hong Kong, are concerned the stock may fall next week.

"This is probably the best timed deal in 2004 from a seller's perspective," said Mehta, who didn't buy the shares.

"The technology cycle peaked in December," he said.

SMIC needs money to more than triple its monthly capacity to 170,000 silicon wafers by next year and to fund the production of China's first 12-inch wafer plant in Beijing.

Texas Instruments Inc is among companies buying more chips from China, the world's third largest and fastest-growing computer chip market, said Dorothy Lai, a Gartner Inc analyst.

China's chip market will grow by 30 percent to US$38 billion this year, Lai said.

Motorola Inc, the world's second-biggest maker of mobile phones, is selling some of its stake in SMIC, a filing to the US regulator shows.

Motorola, which buys chips from Taiwan Semiconductor Manufacturing Co (台積電), plans to use SMIC as a supplier, according to Motorola spokeswoman Gloria Shiu.

The US company, which plans to sell stock for the first time in its unprofitable semiconductor business, agreed last October to swap its US$1 billion chip factory in China for the stake in SMIC. Motorola transferred the plant in the northern port city of Tianjin to the Chinese company last Saturday.

SMIC's shares will start trading in New York as American depositary receipts next Wednesday and in Hong Kong the next day.

Market research firm IDC said global sales growth of computer chips will peak this year at 18 percent and slow to an average of 7.8 percent in the next four years.
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