The young China-based foundry hopes to hit the markets with a share price valued at three times book value, according to a recent report in Finance Asia. The foundry would not comment on the report. But, for context, Taiwan Semiconductor Manufacturing Co. is trading at about 3.5x and United Microelectronics Corp. at about 1.6x.

Between now and the offering, SMIC plans to continue its push to become a foundry player in DRAM. Toward that end, it has started construction of a 300-mm wafer fab in Beijing. That venture may seem to make little commercial sense, but the Beijing government really wants to keep ahead of the Joneses in Shanghai.

Every so often, I poll Taiwanese IC design execs on their willingness to run logic-based silicon at SMIC. Thus far, few find it attractive. The biggest concern is that their designs will pop up elsewhere. They wouldn't dream of handing over a GDSII file; they cringe even at the prospect of handing over mask sets, despite rock-bottom wafer prices.

So it's easy to see why SMIC may have taken on more DRAM than it originally anticipated. It will take the foundry some time to overcome issues of trust.

Another change for SMIC concerns its willingness to be the poster child for the Chinese chip industry. Over the past year, the foundry — displeased, in some cases, with media coverage — has become more conservative on access. The last time I visited, the PR folks tried to get me to sign a nondisclosure agreement — forgetting, perhaps, that my job is to disclose information.

SMIC chief executive officer Richard Chang likes to say there is room for everybody in the China's growing chip sector. He likes to cite statistics that show China can't meet its internal demand. But that's disingenuous in this time of global overcapacity. I'd like to hear a more compelling business strategy — for instance, how SMIC plans to defend its turf from incursions by its Taiwanese rivals.

So far, the fundamentals for an IPO don't look great. But sometimes, where China is concerned, a little snake-oil salesmanship is all it takes.

Taiwan bureau chief Mike Clendenin can be reached at mclenden@cmp.com.