Semiconductor Manufacturing International Corp’s (SMIC, 中芯國際) Richard Chang (張汝京) resigned as chief executive officer of the company he founded after China’s largest chipmaker posted losses for more than two years.
David Wang (王寧國), 63, a director at Solar Fun Power Holdings Co, will replace Chang, who is leaving to pursue other interests, SMIC said in a statement to the Hong Kong stock exchange yesterday. Wang was previously chairman at Huahong NEC, a Chinese chipmaker, and an executive at Applied Materials Inc, the statement said.
Chang’s resignation follows an agreement reached by the company on Monday with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to resolve a trade-secrets lawsuit. The Shanghai-based chipmaker’s shares, suspended from Hong Kong trading since Nov. 4, have declined 86 percent since the company sold stock at HK$2.72 in an initial public offering in March 2004.
“You can see how investors may have been disappointed at SMIC’s performance to date,” said Steven Pelayo, who rates SMIC shares “overweight” at HSBC Holdings Plc in Hong Kong. “Getting somebody new at the helm, who will likely put in their own team, may help to reboot investor perceptions, and hopefully they can move forward from there.”
SMIC trails bigger rivals including TSMC in technology for making more advanced products, which have higher profit margins. The Chinese company will focus most of its capital spending next year on facilities that make higher-specification chips, Chang said last month.
SMIC, which last posted a profit in the first quarter of 2007, reported its third-quarter loss widened to US$69.3 million as the global recession damped chip demand. The company is expected to post a full-year profit next year as depreciation costs drop and orders increase, Chang said at the earnings announcement last month.
TSMC, the world’s biggest custom-chip maker, sued SMIC for allegedly causing more than US$1 billion in damages by using 65 of its trade secrets and breaching a US$175 million agreement reached in 2005, Jeffrey Chanin, an attorney for the Hsinchu, Taiwan-based company, said on Nov. 3.
An Oakland judge on Monday issued a judgment in favor of TSMC and awarded it a US$200 million payout, pursuant to an agreement by both companies, said Amelia Hansen, a spokeswoman for the law firm Keker & Van Nest LLP. The San Francisco-based firm represented TSMC.
In addition to the US$200 million cash payment, SMIC agreed to issue TSMC 1.79 billion shares and warrants for 695.9 million further shares, TSMC said in a statement yesterday.
Both parties also agreed to terminate the patent cross-licensing agreement signed in 2005, the statement said.
Chang, 61, worked for 20 years at Texas Instruments Inc, where he helped build chip plants in the US, Japan, Singapore, Italy and Taiwan. He served as president of Taiwan’s Worldwide Semiconductor Corp (世大半導體) from 1998 to 1999, before it was acquired by TSMC.
He founded SMIC in 2000 with funding and land from the Chinese government. His native Taiwan fined him NT$5 million (US$155,000) in 2005 for forming the company and ordered him to withdraw his investments from China. Chang, a US citizen, won a court decision against the freezing of his assets in March of 2007 because the Taiwanese government couldn’t prove he was the main investor in SMIC.
RSS