Dramatic mainland rescue at Siemens

The British Government is expected to announce today that a mainland telecommunications firm will buy a key stake in a US$650 million microchip plant owned by German industrial giant Siemens.

The plant, set to close yesterday with hundreds of job losses, will operate while rescue talks continue.

Sources confirmed that the talks, which began after Siemens announced the plant's shutdown this year, were under way adding there were a number of interested parties.

However, the mainland firm is said to be the front-runner.

British Prime Minister Tony Blair, whose constituency is near the plant, is said to have taken an interest in pushing the talks with the mainland party.

Mr Blair has led a campaign for greater political and business links with the mainland, developing a strong rapport with Premier Zhu Rongji following his visit to Beijing in October, and Mr Zhu's visit to London in April.

Mr Blair is also thought to have been eager to close the deal this week. Next Tuesday, he is due to speak at a London conference on conducting business with the mainland.

Yesterday a spokesman for Mr Blair said: 'The prime minister has a constituency interest in this - and he may have raised it in Beijing.' The investment would be the largest by a mainland firm in Britain, and sources yesterday said it could mean Siemens selling as much as 49 per cent of the plant.

Siemens reportedly had been in discussion with Singapore Technologies.

It is thought the mainland firm is keen to produce semiconductors for use in mobile phones, as the mainland develops its cellular network.

There were suggestions that some Siemens technology may be transferred to build a plant in the mainland.

The deal is said to be supported by Siemens which will save GBP400 million (about HK$5.1 billion) in closure costs if the sale is completed.