Semiconductor Manufacturing International Corp (SMIC) on Wednesday sought to play down fears mainland chipmakers were adding too much capacity, ahead of the company's listing. In the first hour of New York trade Wednesday, American depositary receipts for the mainland's largest chipmaker fell 11.42 per cent to US$15.50. The Hong Kong shares, priced at $2.69, excluding brokerage fees, debut today. Buying demand from institutions in the secondary market is likely to be smaller than in recent initial public offerings because the clawback was less aggressive, said John Koh, fund manager with Daiwa Asset Management, noting that institutional investors ended up with 80 per cent of the offering compared with only 50 per cent in most recent deals, including China Oriental, Wei Chai Power and Tom Online. The retail portion of the offer was increased to 20 per cent from 5 per cent after local investors asked for 272 times as many shares as were originally available to them. 'I will try not to be too greedy. If I get 10 per cent on my investment, I will probably sell,' said Mr Koh. 'Long-term you should expect growth in the stock, because demand for integrated circuit chips is quite strong.' SMIC plans to use proceeds from its US$1.79 billion offer to ramp up capacity to 125,000 eight-inch wafer equivalents per month this year and 185,000 next year, from 58,000 at the end of last year. At the opening of Semicon China, an industry conference being held in Shanghai, chief executive Richard Chang took to the podium yesterday to 'clarify some myths' that mainland chipmakers were aggressively ramping up production. He noted Taiwanese chipmakers planned to spend US$7 billion this year to add capacity, while outlays on the mainland were half that at $3.4 billion. In Taiwan, capital spending was expected to equal 67 per cent of revenue, while for the mainland the figure was just 5.8 per cent. Mr Chang's comments appear directed at cross-strait rival Taiwan Semiconductor Manufacturing Co (TSMC), whose chairman Morris Chang had criticised the rapid expansion of mainland chipmakers, saying the additional supply eventually would lead to the next downturn for the cyclical industry. SMIC's Mr Chang said there was just one 12-inch wafer facility going up in China - his company is building one in Beijing - while Taiwan led the world with the most 12-inch chip plants. Also, if the company reached 185,000 eight-inch wafer equivalents per month, this would still put it far behind TSMC, the world's largest contract chip manufacturer, and No?2 player United Microelectronics. 'SMIC is still much smaller than them.' While some market watchers expect the global chip industry to begin to turn as early next year, Mr Chang forecast strong China demand through 2006, with utilisation rates of more than 80 per cent. But he said the wait for new and used equipment was growing longer as the semiconductor cycle strengthened. Mainland chipmakers were especially reliant on used equipment, which could be operated profitably for several more years in low-cost China after outliving their usefulness in western countries. About 30 to 50 per cent of the US$1.16 billion in chip equipment sold into the mainland last year was refurbished tools.