Top Chinese Chip Maker Says It is a Buyout Target MOVERS MARKETPLACE By Bloomberg

By Janet Ong

Semiconductor Manufacturing International, the biggest Chinese chip maker, said that it was being targeted by buyout firms.

Potential strategic investors, including private equity firms, have approached the company, a spokesman, Douglas Hsiung, said Thursday. He declined to elaborate. An acquisition of the company, which is based in Shanghai and is falling behind rivals like Taiwan Semiconductor Manufacturing, would be the latest in an industry forecast to grow at the fastest pace in three years. In November, Carlyle Group offered $5.7 billion to buy Advanced Semiconductor Engineering of Taiwan. In September, Freescale Semiconductor accepted a record $17.6 billion offer by private equity firms led by Blackstone Group. “Potential investors such as private-equity firms may be looking at SMIC because of its low price-to-book value,” said Rick Hsu, an analyst at Nomura Securities in Taipei.

The shares surged 13 percent Wednesday, their biggest gain in more than two years. On Thursday, the stock fell 1.6 percent to close at 1.21 Hong Kong dollars, or 15 U.S. cents. Global semiconductor sales will probably rise 11 percent this year, the fastest growth since 2004, helped by increased chip demand from consumer electronics makers, the market research firm ISuppli said this week. Still, SMIC, whose customers include Texas Instruments and Elpida Memory, reported its net loss had widened to $35.1 million in the three months that ended Sept. 30, compared with $26.1 million a year earlier, as customers trimmed orders to clear inventory. Revenue in the first quarter of 2007 may fall 2.5 percent from the previous quarter because of a continuing inventory correction, said Donald Lu, an analyst at Goldman Sachs Beijing Gao Hua Securities.

(c) 2007 International Herald Tribune. Provided by ProQuest Information and Learning. All rights Reserved.