Top mainland chipmaker Semiconductor Manufacturing International Corp is planning a share sale that would allow a potential investor to have a lion's share of the company's issued share capital. The Shanghai-based company 'is currently in relatively advanced negotiations with a strategic investor', according to a SMIC announcement on the Hong Kong stock exchange's website. The talks could lead to 'a possible acquisition' by the investor of SMIC's issued share capital, as well as 'a representation of such investor on the company's board of directors'. No final deal has been reached. 'SMIC's share sale is probably in line with the company's plan to expand its production capacity or launch more new competitive products,' said Nelson Chan Kai-fung, general manager of Bright Smart Securities. 'Market competition among high-technology companies is extremely intense and SMIC might want to leverage on economies of scale, as well as a more diversified product portfolio, to outperform its peers in the market,' Mr Chan said. The company, which expects to invest US$700 million this year on technology and product conversion, said earlier that it would build a facility in Shenzhen, with two lines devoted to eight-inch and 12-inch wafers. Ben Kwong Man-bun, chief operating officer of KGI Asia, said SMIC's attraction would be 'very limited' because its long-term prospects were hard to see. 'Many local investors are actually shying away from such hi-tech stocks as their future very much depends on the market competition, as well as how quickly their new products can be launched and how good they really are,' Mr Kwong said. The Hang Seng Index has lost 24.11 per cent so far this year, while SMIC's shares are down 45 per cent. SMIC, which has had net losses for much of the past three years, posted a loss of US$21.2 million for the three months to December, from a US$25.6 million loss a quarter earlier.
