SMIC Undergoes Management Team Shakeup — Again

Article By : Alan Patterson

SMIC has announced two changes within the top management during this week, but this is not the first time SMIC’s top management rift has surfaced...

Semiconductor Manufacturing International Corp. (SMIC) announced two changes within the top management during this week.

On Dec. 15, the Shanghai-based chipmaker said it has appointed industry veteran as executive director, vice chairman and member of the strategic committee. A day later, SMIC said its co-CEO and executive director Liang Mong-song may resign.

The appointment of Chiang comes about a month after he resigned as CEO from Wuhan Hongxin Semiconductor Manufacturing Company (HSMC), which ran out of cash. Both Chiang and Liang are former R&D executives from Taiwan Semiconductor Manufacturing Co. (TSMC).

The US has made SMIC one of the latest targets of restrictions that are aimed to blunt the growth of China’s tech industry on fears that the nation will gain a competitive advantage in new industry segments such as 5G and AI. The Trump administration concluded there is an unacceptable risk that China’s largest chipmaker may use US production equipment and design tools for military purposes.

Chiang has entered into a service contract that started on Dec. 15 and ends following the 2021 annual general meeting, SMIC said in a statement to the Hong Kong Stock Exchange. Chiang will be subject to re-election following the annual meeting next year, according to the statement. In a separate statement, SMIC said it has become aware of Liang’s intention of conditional resignation.

SMIC’s plans to ramp up production of 7nm chips may have been thwarted by the US Entity List order. The most advanced production technology available from SMIC is 14nm, which is several generations behind its larger rivals.

The company originally aimed to close the gap with larger competitors such as TSMC and Samsung, which are starting production of 5nm chips. The companies compete as chip foundries, supplying products made to the specifications of semiconductor designers and branded companies like Apple and Qualcomm.

Semiconductors have become a linchpin in the competition between the US and China for technological dominance. Asian chipmakers have ramped up chip production at the same time as US investments have declined.

Chiang is one of several top-ranking executives recruited from TSMC in recent years to work for chip companies in China. Liang, a former senior director of R&D at TSMC who leaked process technology to Samsung, joined SMIC as co-CEO in 2017.

Chiang and Liang both made R&D contributions while at TSMC that helped the company lead the semiconductor industry with the world’s most advanced production technology and win Apple as a major customer. Apple today continues to use TSMC as its sole source of application processors for the iPhone.

Notably, this is not the first time SMIC’s top management rift has surfaced. Back in March, 2019, the acrimony percolating between SMIC Co-CEO Haijun Zhao and SMIC co-CEO Liang Mong-song was widely rumored. Reportedly courted by Tsinghua Unigroup chairman Zhao Weiguo to run Unigroup’s yet-to-build DRAM fab in China, Zhao was ready to resign. However, Zhao changed his mind at the last minute, and both SMIC co-CEOs stayed.

This time around, it’s Liang who appears poised to jump ship.

— Additional reporting by Junko Yoshida.

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