SMIC, BIDIMC and ZDG Partner to Establish Wafer Manufacturing Facility

Published on June 4, 2013 at 7:05 AM

Semiconductor Manufacturing International Corporation ("SMIC";), mainland China's largest and most advanced semiconductor foundry, today announced that it entered into the Joint Venture Agreement with SMIC Beijing, BIDIMC and ZDG in relation to the establishment of the Joint Venture Company (subject to the approval of the relevant PRC authorities).

Following its establishment and depending on the environment in which the Joint Venture Company operates and market conditions, the Joint Venture Company is expected to establish and build up significant manufacturing capacity with a focus on 45-nanometer and finer technologies and aims to reach a manufacturing capacity of 35,000 wafers per month. The total investment is estimated to be US$3.59 billion. US$1.2 billion of the total investment will be contributed by the parties in the form of registered capital, and the remaining amount is intended to be funded through the Joint Venture Company's internal cash flow, shareholders' further contribution to share capital, shareholders' loan and/or bank loans.

SMIC and SMIC Beijing shall contribute 55% of the registered capital in an aggregate amount of US$660 million, ZDG and BIDIMC shall contribute 45% of the registered capital in an aggregate amount of US$540 million. The registered capital shall be made by the parties within two years from the establishment of the Joint Venture Company.

Funding to the Joint Venture Company in the form of shareholders' further contribution to share capital or shareholders' loan, if any, will be contributed as to 55% by SMIC and SMIC Beijing, and as to 45% by ZDG and BIDIMC. In addition, the Joint Venture Company and the parties involved may seek debt financing on terms beneficial to the Joint Venture Company.

The progress of contributions by the parties to the Joint Venture Agreement may be adjusted by the Joint Venture Company in accordance with its actual operational needs. If a party does not fully make its relevant contribution by the timing required, until such contribution is fully made, the party may only enjoy its shareholder rights based on its proportional actual contribution. Each of the parties may transfer its rights to subscribe to the share capital and contribution obligations under the Joint Venture Agreement to its affiliates, subject to certain conditions. The cash capital contribution from SMIC will be funded by internal cash flow and, if necessary, other form of financing.

The board of directors of the Joint Venture Company will comprise 5 directors. SMIC and SMIC Beijing are together entitled to nominate 3 directors in total and ZDG is entitled to nominate 2 directors. BIDMIC is entitled to appoint an observer to sit in at the board meetings. SMIC will be responsible for managing the daily operations of the Joint Venture Company. The term of operation of the Joint Venture Company will be 25 years from the date of the issue of its business license. The parties to the Joint Venture Agreement shall decide whether to extend the term of operation of the Joint Venture Company at least six months prior to the expiry date of the term of operation, subject to the approval of the relevant PRC authorities. The Joint Venture Agreement will, after being agreed and signed by the parties, become effective on the day on which all necessary approvals and consents from the relevant PRC governmental and regulatory authorities have been obtained. The obligations of the parties under the Joint Venture Agreement are subject to compliance with applicable laws (including those of regulatory authorities (including the Stock Exchange)).

Source: http://www.smics.com/

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