Grace seeks funding for expansion

Grace Semiconductor Manufacturing Corp (宏力半導體) aims to raise as much as US$300 million in private funding to add capacity at a factory in Shanghai, company executives said.

"We expect to complete US$200 million of that by the end of June," chief financial officer Daniel Wang (王鼎) said.

"If things go well, we'll raise US$300 million," Wang said.

The private funding round will help Grace complete expansion of its first chip plant, which would have monthly capacity of 27,000 eight-inch silicon wafers by the end of this year.

GEMS Hong Kong Ltd, a venture capital company that counts former US secretary of state Henry Kissinger, Goldman Sachs Asia vice chairman Kenneth Courtis and billionaire Ananda Krishnan among its advisers, provided US$55 million to Grace and said it may add more in the new round of fund raising.

"We want to use our network to provide contacts with potential investors in Grace," said Kevin Yip, executive director at GEMS. He declined to identify possible investors.

GEMS was founded by Simon Murray, a former member of the French Foreign Legion who at one time worked as managing director at Hutchison Whampoa Ltd. Hutchison Whampoa is the biggest company owned by Li Ka-shing (李嘉誠), Asia's richest man.

Started by Jiang Mianheng (江綿恆) and chairman Winston Wang (王文洋), a scion of one of Taiwan's wealthiest families, Grace aims to add to its overseas investors in case of political problems. Those risks involve possible nationalization by the Chinese government, according to Wang, 52, son of Wang Yung-ching (王永慶), chairman of Formosa Plastics Group (台塑集團), Taiwan's biggest industrial group.

"By increasing our international investors, we will have more protection," Wang. He and Jiang Mianheng, a son of former Chinese president Jiang Zemin (江澤民), have been "good friends" because they don't talk about politics, he said.

The main product from Grace is flash-memory chips used to store information in DVD machines and digital audio players. The company feels the need to expand to compete with rivals such as Taiwan Semiconductor Manufacturing Co (台積電), the world's biggest supplier of made-to-order chips.

Proximity to customers in China will help boost sales, according to Winston Wang.