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SMIC shares soar on news of strategic investor

Posted: 27 Mar 2008 ?? ?Print Version ?Bookmark and Share

Keywords:shares? China? chipmaker? negotiations? strategic investor?

The shares of China's biggest chip foundry, Semiconductor Manufacturing International Corp. (SMIC), rose 16.5 percent to a record high after the company disclosed March 24 that it is in advanced negotiations with a strategic investor, according to a Bloomberg report.

Part of SMIC's management may also buy shares, revealed SMIC spokesperson Reiko Chang. The foundry hasn't signed a binding agreement and the talks may not result in a transaction, Chang said.

"The strategic investor may be one of SMIC's customers that wants access to their production capacity and would be able to bring in orders, which is a model that's been common practice in the chip industry,'' said Rick Hsu, an analyst at Nomura Holdings Inc., as quoted by Bloomberg.

Around this time last year, reports that SMIC was on the hunt for a strategic investor willing to pay as much as $500 million for a 20-percent stake also raised the foundry's stock price 9 percent in Hong Kong. The reports said that SMIC hired Morgan Stanley and Deutsche Bank to find a new partner.

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