Microsoft China is buying 15 million shares of China's Sichuan Changhong Electric, one of the mainland's largest television makers.

Microsoft will pay 94.05 million yuan for the shares at a price of 6.27 yuan each and they will not be tradable for 36 months from the end of Changhong's non-public offering of 400 million shares, a statement from Changhong said.

Changhong is raising 2.5 billion yuan to develop its plasma display panel (PDP) production line by selling 400 million shares for a minimum 6.27 yuan each.

The statement prompted Changhong Electric shares to surge by the 10-percent daily limit on Monday to 10.92 yuan, following up a 9.97-percent increase due to speculation on Thursday.

Roger Chen, a Microsoft spokesman in Beijing, said Microsoft made the investment because Changhong was competitive and had advantages in digital entertainment products.

Changhong, the company based in southwestern city of Chengdu, refused to give further information.

Microsoft signed a memorandum of understanding with Changhong on Friday to cooperate in a project named Media Galaxy to develop products that connect televisions with computers and the Internet, said the statement.

Chen said Microsoft's digital media technologies would be used in the products, but declined to give more details on Media Galaxy.

In 2004, Changhong and Microsoft signed an agreement to cooperate in the field of multimedia, which Changhong said would help consolidate and develop its market share in China's multimedia market.

The investment of Microsoft showed investors were optimistic about the development of Changhong, observers said.

Last year, Changhong acquired a 75-percent stake in the Republic of Korea's third largest PDP producer Orion PDP Co.Ltd., entering the upper level of the production value chain.

Changhong realized a record 18.8 billion yuan in main operating turnover last year, up 24.5 percent from the previous year. About 50 percent of the total came from color TV business.

Source: Xinhua