SMIC Heads For March Nasdaq Listing
Shanghai-based SMIC (Semiconductor Manufacturing International
Corp.) is heading for a March listing on Nasdaq. The company
hopes to raise US$1 billion in the IPO, which it plans
to invest in manufacturing capacity expansion. The underwriters
are believed to be Deutsche Bank and CSFB.
SMIC already has won sizable orders from Infineon of
Germany for DRAM chips, as well as from Japan, which puts
it in a stronger position to compete internationally.
Earlier this month, Motorola injected an 8" silicon
wafer fab in Tianjin into SMIC, taking a minority position
in the new company which is driving China's chip fab growth.
In December, TSMC (Taiwan Semiconductor Manufacturing
Corp.), which is the world's largest chip fab, and is
based in Hsinchu, Taiwan, sued
SMIC in a northern California court for intellectual
property violations. This was widely seen as a move to
prevent SMIC going public in the US.
SMIC has borrowed US$285 million from China Construction
Bank and Industrial and Commercial Bank of China to increase
its current 8" silicon wafer capacity. The company,
which was founded in 2000, now has three 8" silicon
wafer fabs. The company has a close relationship with
China's four major banks, and Jiang Mienheng, son of former
Chinese president Jiang Zemin, acts in an advisory capacity
to the company. Winston Wang, son of Taiwan's plastics
magnate Wang Yung-ching and Neil Bush, younger brother
of the US president, are also involved with the company.
The first loan the company took from the Chinese banks
was in the amount of US$480 million in December 2001.
The company is now planning to make three 12" silicon
wafer fabs in Beijing. Projections are that SMIC's China
operations this year will put it ahead of Singapore's
Chartered Semiconductor, making China the world's third
largest chip fab maker. Five years ago, China had almost
no domestic manufacturing capacity.
The chip industry has rebounded from the latest deflation
cycle, and Morris Chang, chairman of TSMC, yesterday revealed
that the company planned to invest US$2 billion in capital
expenditures during the current cycle. The main question
is, where will he invest the money, in China or Taiwan?
TSMC has received approval to invest in China, but because
of political considerations (the Taiwan government is
a shareholder in the company), has held back.
SMIC's aggressive expansion means that the window of
opportunity is closing for TSMC in China.
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