Siemens chip plant finds Chinese saviour

Siemens is reported to have found a buyer - or at least a part-buyer - for its chip making facility on Tyneside.

A Daily Telegraph report claims an unnamed Chinese telecoms company is about to buy 49 per cent of the plant from Siemens' beleaguered semiconductor division.

Since the closure of the plant was announced in July, Siemens has worked alongside the Department of Trade and Industry (DTI) and Trade Secretary, Peter Mandelson, in a bid to find a buyer.

But industry experts gave the search little chance of success. The worldwide market for chips, especially the type of commonplace DRAM semiconductors made at Siemens' Tyneside facility, has been depressed for over a year. The Asian crisis has exacerbated the problem, causing major manufacturers such as Hyundai and Samsung of South Korea to flood the international market as they have tried to export their way out of trouble.

However, a Siemens spokeswoman sounded a note of caution when she told Silicon.com there has been no official change in the situation, although there is likely to be an announcement made some time this week.

A DTI spokesman said the UK government is "still in talks with a small number of interested parties".

Although news of a prospective investor is a boost for the region - with several thousand more jobs in the area depending indirectly on the Siemens plant - it may be too late for many of the company's employees. About 300 staff have already left, with 500 more leaving this week, despite Siemens saying this summer that it hoped to save around 200 jobs through relocation.

Any investment by a company from mainland China could depend on financial sweeteners from the UK government, especially if that company needs funds to turn the plant into a telecoms-oriented facility.

Siemens has said it would repay grants it received to set up the high-tech plant, but tempting another foreign investor to rescue the facility may carry a high price.