March 11 (Bloomberg) -- Semiconductor Manufacturing International Corp., China's first chipmaker to sell shares publicly, may raise the maximum HK$14 billion ($1.8 billion) from its initial public offering, after the company received excess orders for its stock, investors said.

China's biggest chipmaker and its shareholders may price the 5.15 billion shares on offer in London today at the top of the range earlier marketed of HK$2.41 and HK$2.72 each, investors said. Orders for the shares exceeded six times the amount offered by the end of last week, bankers involved said at the time, providing the company with the money it needs to fund expansion.

``With demand that strong it's easy for a company to price at the top of the range,'' said David Chapman, who helps manage $650 million in global equities at Towry Law Asia HK Ltd. ``It's just lucky if the stock you buy is a good one.''

Shanghai-based Semiconductor Manufacturing needs money to more than triple its monthly capacity to 170,000 silicon wafers by 2005 and to fund the production of China's first 12-inch wafer plant in Beijing. It's expanding to compete with rivals such as Taiwan Semiconductor Manufacturing Co., the world's biggest supplier of made-to-order chips.

The sale could be the world's third-biggest initial public offering this year, after Japan's Shinsei Bank Ltd. and Assurant Inc., of the U.S., which both raised more than $2 billion. Semiconductor Manufacturing's shares will start trading in New York as American depositary receipts on March 17 and in Hong Kong the next day.

Excess Demand

``Subscription is strong as it is a new sector being offered out of China,'' said Aaron Pong, who manages $200 million in Asia, excluding Japan, at RBC Investment Management (Asia) Ltd. ``There may be a decent trading gain given the level of demand.''

Sales of new equity earlier this month by companies such as TOM Online Inc. and Weichai Power Co. received excess demand, with the shares sold near the top of the ranges marketed to investors.

That didn't stop Tom Online, a Chinese Internet company controlled by Asia's richest business man Li Ka-shing, from falling as much as 10 percent in Hong Kong today on its debut.

Some investors, including RBC Investment's Pong and Oscar Leung, senior investment manager at ING Investment Management Asia Pacific, said not all companies in China selling shares are worth buying.

``Part of the demand seen for China shares is driven by fundamentals, but I can't rule out some of it being a bit speculative,'' said Leung, who declined to name companies. ING Investment holds more than $50 billion in Asia excluding Japan.

Rising Shares

Tom Online had net income of $19.6 million last year on revenue of $77.1 million, compared with a net loss of $8.4 million on revenue of $29.9 million a year earlier.

Shares of Weichai Power, makes heavy truck diesel engines in China, rose as much as 29 percent on their Hong Kong debut after professional investors ordered 99 times the stock available to them.

Semiconductor Manufacturing may raise about HK$8.2 billion from its 3.03 billion shares on offer, with the remainder of the proceeds going to shareholders who are selling stakes, including Goldman Sachs Group Inc. and Motorola Inc. The sale first involved 4.545 billion shares before being increased 12 percent.

The shareholders may sell an additional 773 million shares depending on demand. Each American depositary receipt represents 50 shares and is being offered at the equivalent of between $15.50 and $17.50.

Credit Suisse First Boston and Deutsche Bank AG are arranging the sale. Officials from the banks declined to comment.

An index of China-incorporated companies listed in Hong Kong has more than doubled since the start of last year, as investors bet China's 9.1 percent average economic growth for the past decade will boost profit. Hong Kong's benchmark Hang Seng Index rose 40 percent during the period.

Tom Online, a Beijing-based Internet company controlled by Asia's richest business man Li Ka-shing, received orders for 42 times the number of shares it offered while Weichai Power, which makes heavy truck diesel engines in China, received orders for 99 times the number of shares it offered professional investors.

``There has been blind demand for China which will start tapering off as stocks fail to perform,'' said Chapman.

To contact the reporter on this story: Paul Scanlon in Hong Kong at paulscanlon@bloomberg.net.

Last Updated: March 10, 2004 23:29 EST