SMIC claims it is being targeted by buyout businesses

Semiconductor Manufacturing International Corp (SMIC, 中芯), China's biggest chipmaker, said it is being targeted by buyout firms, which spent a record amount on acquisitions last year.

Potential strategic investors including private-equity firms have approached the Shanghai-based company, spokesman Douglas Hsiung said. He declined to elaborate.

"The directors of the company are always looking at strategic and or other opportunities to enhance shareholder value," the chipmaker said in a statement to the Hong Kong stock exchange. "No decision has been made about any resulting transaction."

Any acquisition of the company, which is falling behind rivals such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), would be the latest in an industry forecast to grow at the fastest pace in three years. In November, Carlyle Group offered US$5.7 billion to buy Taiwan's Advanced Semiconductor Engineering Inc (日月光半導體). In September, Freescale Semiconductor Inc accepted a US$17.6 billion offer by private-equity firms led by Blackstone Group LP.

"Potential investors such as private-equity firms may be looking at SMIC because of its low price-to-book value," said Rick Hsu (徐稦成), an analyst at Nomura Securities Ltd in Taipei.

He rates the stock an "underperform."

The shares surged 13 percent on Wednesday, their biggest gain in more than two years. Yesterday stock fell 1.6 percent to close at HK$1.21 (US$0.16) in Hong Kong.

Donald Lu (呂東風), an analyst at Goldman Sachs Beijing Gao Hua Securities, said SMIC's strong share performance in the last two days doesn't reflect operating improvements. He rates the stock "neutral" with a 12-month target price of HK$1.28.