Li to buy stake in Grace

Hong Kong billionaire Li Ka-shing (李嘉誠) will spend US$90 million on a stake in China's Grace Semiconductor Manufacturing Corp (宏力半導體), which will use the funds to increase capacity.

The investment through Li-controlled Hutchison Whampoa Ltd and Cheung Kong (Holdings) Ltd will take the form of shares, Grace Chief Financial Officer Daniel Wang said today. The funds will be used to expand the company's Shanghai plant, he said.

Grace and rival Semiconductor Manufacturing International Corp (中芯國際集成電路), China's biggest chipmaker, are selling shares to increase production in the world's third-largest and fastest-growing market for semiconductors. China's chip market is forecast to expand to US$39.7 billion this year and US$68.6 billion in 2008, research group Gartner Dataquest said.

The Shanghai plant, which started commercial production in September last year, has a monthly output of 25,000 eight-inch wafers. Grace expects to raise output to 33,000 wafers a month in the first half of next year, the company said.

Among Grace's backers is Hong Kong-based General Enterprise Management Services Ltd, or GEMS, a buyout fund management firm headed by Simon Murray, who was previously managing director at Hutchison Whampoa and Asia-Pacific chairman of Deutsche Bank AG.