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Motorola sells $1B chip plant in China
With the sale of its $1 billion Chinese chip factory, Motorola Inc. has begun streamlining its Austin-based Semiconductor Products Sector as it prepares to spin off the division as a publicly traded company.

Motorola will transfer ownership of its Tianjin, China-based semiconductor plant to China-based Semiconductor Manufacturing International Corp. for an undisclosed amount of SMIC stock, Motorola announced. Motorola also will secure a seat on SMIC's board. SMIC produces chips for other companies. Abou 500 people are employed at the plant.

Motorola will continue to own and operate its nearby semiconductor assembly and test center, which employs 1,200 people.

The chip plant was constructed in 2000, but Motorola put its completion on hold because of the decline in industry demand for semiconductors, according to the company.

After the sale, Motorola will have seven chip factories around the world, including two in Austin.

Motorola is planning an initial public offering of a portion of the semiconductor unit, followed by a distribution of the remaining shares to shareholders. The deal is subject to approval by Motorola stockholders.

The Semiconductor Products Sector employs 6,600 people in Austin. The unit's leadership, design and manufacturing team remain in Austin, Motorola spokeswoman Nan McRaven has said. The new company will become the second largest publicly traded company in Central Texas, behind Round Rock-based Dell Inc. [Nasdaq: DELL].

The subsidiary will become the world's No. 1 producer of embedded processors and allow Motorola to focus on its communications and electronics systems businesses.

Schaumburg, Ill.-based Motorola [NYSE: MOT] specalizes in wireless, automotive and broadband communications. Sales in fiscal 2002 totaled $27.3 billion.

© 2003 American City Business Journals Inc.