* SMIC has received $500 mln injection from govt - sources
* Company is negotiating a syndicated loan - sources
* Injection likely to be used for Beijing expansion - source
TAIPEI, Oct 29 SMIC (0981.HK), China's largest
contract chipmaker, recently received a $500 million cash
injection and is pursuing a major syndicated loan, seeking new
funds as it moves toward its goal of sustained profitability, two
sources familiar with the situation said.
In the decade since its founding, Semiconductor Manufacturing
International Corp (SMI.N) has been trying to attain the scale to
effectively compete with the world's top chipmakers, Taiwan
Semiconductor Manufacturing Co Ltd (TSMC) (2330.TW) and United
Microelectronics Corp (UMC) (2303.TW), both of Taiwan, but has
consistently lost money.
Company founder and longtime Chief executive Richard Chang
was ousted late last year and replaced with another industry
veteran, David Wang, who has set about overhauling the company
with a repeatedly stated goal of sustained profitability.
"The government is investing $500 million in SMIC's second
stage in Beijing," said one of the sources, speaking on condition
of anonymity because he was not authorised to speak to the media.
He added that the specific manner of injection for the $500
million had not yet been determined, but the company had a
relatively urgent need for the money.
Another source familiar with the situation said the money
would likely be used to expand capacity at the company's Beijing
plant, specifically to quickly ramp-up production of chips using
65-nanometre technology, where SMIC is playing catch-up in a
space now dominated TSMC and UMC.
A spokesman for SMIC had no comment.
The new investment follows an earlier $172 million investment
in the company in 2008 by Datang Telecom Technology Co Ltd
(600198.SS), a state-run Chinese maker of telecommunications
In Wang's one-year tenure, SMIC has overhauled its top
management team and exited a number of non-core operations to
focus on its core business of making high-end made-to-order
microchips for the likes of Texas Instruments Inc TXN.N.
The company's Hong Kong-listed shares rallied early this year
on hopes that Wang could engineer a quick turn-around, tripling
from HK$0.33 at the beginning of the year to more than $1 in late
March. But they have since given back some of those gains, and
were down 3.1 percent at HK$0.63 in Friday afternoon trading.
(Reporting by Jennifer Yang, writing by Doug Young; Editing by