China Telecom named as Siemens chip plant saviour

A leading union official has named China Telecom as the backer of an attempted management buyout of Siemens' Tyneside chip plant.

Roger Lyons, Director General of the UK Manufacturing, Science and Finance Union, was reacting to newspaper reports that three of the plant's managers are planning a takeover bid.

Lyons said: "The hand of China Telecom is behind this. Three managers are buying 67 per cent of the plant for £398m, funded at least in part by China Telecom. Siemens is keeping the rest to avoid paying back its loans and grants to the DTI."

A meeting on Wednesday should decide the future of the troubled plant. Its closure was announced in July, with the loss of 1,100 jobs; only 300 people will remain at the factory by the end of the month.

Lyons also predicted that the plant will keep, at least in part, the Siemens name. He claimed it will make logic chips for the next generation of mobile phones.

Richard Gordon, senior analyst at Dataquest, said: "The problem is that the industry has gone through such a bad period over the last three years that everyone is reluctant to invest. However, the Siemens plant in Tyneside is an attractive, modern facility."

A Siemens spokeswoman confirmed that the company is in negotiations with a management group, but would not discuss the value of the deal, as negotiations are still ongoing. The spokeswoman would not discuss who the group's backers might be.

A spokesman for the Chinese Embassy was unable to confirm the story.