Motorola took a significant stake in Semiconductor Manufacturing International Corp. (SMIC) this week, selling the foundry its MOS-17 wafer facility in Tianjin, China, in exchange for SMIC shares.

Motorola China Electronics Ltd., a wholly owned subsidiary of Motorola, announced on Monday that it had closed the deal, an agreement originally released in October 2003. The cooperation also sees the companies entered into a foundry relationship and IP partnership for CMOS technology.

While Motorola maintained that the deal sees it become a "significant" equity holder in SMIC, entitling it to a seat on SMIC's board, financial terms and capacity plans were not disclosed.

The deal comes as SMIC continues to raise funds for an IPO this year. The IPO hit a snag late last year when foundry king and SMIC rival Taiwan Semiconductor Manufacturing Co. filed a suit against SMIC over patents and trade secrets.

Independently, SMIC announced on Monday that it had scored a $285 million loan with four major Chinese banks in Shanghai - Industrial and Commercial Bank of China, China Construction Bank, Bank of Communications and Shanghai Pudong Development Bank.

The loan will be used to expand the capacity of SMIC's three 8-inch fabs located in Shanghai and has a repayment period of five years. SMIC is permitted to draw down the loan in stages, it said.

This is the second time that SMIC entered into a loan agreement with these four banks. The first loan agreement for $480 million was signed in December 2001. This latest loan follows a $630 million private placement of shares by SMIC in September 2003.