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Semiconductors and Components

China Pumps Cash Into SMIC

18 February 2015

The Chinese government has provided the nation's leading foundry Semiconductor Manufacturing International Corp. (SMIC), with an additional $400 million by way of an investment from the China Integrated Circuit Industry Investment Fund (CICIIF).

The CICIIF is a national fund established in September 2014 to support the growth of the IC industry in China and enable the integration of the Chinese IC supply chain's ecosystem. It has agreed to acquire 4.7 billion newly issued shares in SMIC at a subscription price of HK$0.6593 per share.

The aggregate consideration for the shares is HK$3,098.71 million (about $400 million) and they represent approximately 13.10 percent of the existing issued share capital of the company and approximately 11.58 percent of the enlarged share capital of the company.

SMIC said it intends to use the money raised from the sale of the new shares for capital expenditure, debt repayment and general corporate purposes.

"We are happy to receive CICIIF's recognition and investment. This shows SMIC's important role in the China semiconductor ecosystem," said Tzu-Yin Chiu, CEO of SMIC, in a statement. "Partnering with CICIIF further supports SMIC's long-term goals of gaining a stronger foothold in China and playing a more important role in the global IC market."

Under previous agreements Datang and Country Hill, significant shareholders in SMIC, have pre-emptive rights to also buy additional shares. The maximum gross proceeds of the potential Datang further subscription will be approximately HK$864.94 million (about $110 million). The maximum gross proceeds of the potential Country Hill further subscription will be approximately HK$477.42 million (about $60 million). SMIC said it would make announcements relevant to the uptake of the rights being taken up by Datang or Country Hill, as necessary.

Questions or comments on this story? Contact peter.clarke@ihs.com

Related links and articles:

www.smics.com

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