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Chipmaker to spin off plant in IPO

By Wang Xu
Updated: 2007-02-03 08:45

Semiconductor Manufacturing International Corp (SMIC), China's biggest contract chipmaker, plans to spin off its production plant inBeijingwith a domesticinitial public offering(IPO), sources familiar with the situation said.

"SMIC has talked with us about spinning off its Beijing manufacturing facility in a domestic share offering," said an official from Beijing Municipal Bureau of Industrial Development, who asked to remain unnamed.

Established in 2000, SMIC is headquartered inShanghaiand listed both inHong Kongand the US. Its 12-inch wafer facility in Beijing is currently the most advanced chip manufacturing facility in China. It also operates three 8-inch manufacturing facilities in Shanghai and another one inTianjin.

"The performance of our Beijing factory is going well, thanks to its advanced technology," said Reiko Chan, a SMIC's public relations official. But Chan declined to reveal detailed financial data on the plant or to comment on the potential IPO.

"The timing and policy environment is good for SMIC to hold an domestic offering," said Li Ke, an analyst with CCID, a Beijing-based consultancy. "Given the current bullish domestic stock market, it's possible for SMIC to raise enough funds. "

According to Li, the government is supportive to local chipmakers in efforts to list at home.

SMIC posted a net income of $1.2 million for its fourth quarter ending on December 31, compared with a net loss of $15 million a year earlier. The company's sales revenue for last year reached $1.46 billion, up 25 percentyear-on-year, yet the company still recorded a loss of $40 million in 2006 due to depreciation expenses.

(China Daily 02/03/2007 page10)