BEIJING Semiconductor Manufacturing International Corp. is on the hunt for a strategic investor willing to ante up as much as $500 million for a 20 percent stake, according to a report in the Financial Times.
SMIC has reportedly hired investment banks Morgan Stanley and Deutsche Bank to find a new partner. The Shanghai-based foundry declined comment.
The news sent its stock price up 9 percent in Hong Kong. Earlier this year, a similar rumor sent its New York-listed shares soaring 22 percent.
After posting losses for the past two years, SMIC is under increasing pressure to boost profits in an industry that requires heavy R&D and capital expenditures.
In January, SMIC said it would implement a few strategies to improve its chances of attaining consistent profitability. The changes include a new method for calculating depreciation, ramping up advanced technology production in 90- and 65-nanometer designs, and focusing on fabs it will manage but not own.
SMIC eked out a profit last quarter, but failed to remain in the black for the entire year. In 2006, revenue hit a record $1.46 billion, but losses totaled $40.4 million. Last quarter's modest $1.2 million profit came, in part, because SMIC sold some old equipment to a fab in Chengdu that it will manage for local investors, including government entities.
SMIC plans to ramp up a 200-mm wafer fab, Cension Semiconductor Manufacturing Corp., this summer, and expects it to produce 13,000 to 20,000 wafers per month by the end of the year.
Also by that time, it will begin pilot production at a 300-mm wafer plant, Wuhan Xinxin Semiconductor Manufacturing Corp., another venture that SMIC is managing for local investors, including the government.