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SCMP Reporter

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.



SMIC in talks with strategic investor