SMIC evaporates 4 billion Hong Kong dollar executives in three days

For SMIC, the largest integrated circuit company in mainland China, the past two weeks have not been very smooth. The death of Chairman Jiang Shangzhou made it fall into an unprecedented human turmoil and further involved the intricate interests and entanglement. In this long tussle, around the vacancy of the chairman of the board of directors, two executives headed by CEO Wang Ningguo and COO Yang Shining competed against each other, and behind them stood different major shareholders, causing speculation from outside. Not long ago, SMIC sent an announcement to reporters announcing that the chairman of the company was occupied by Zhang Wenyi, an veteran in the industry, and Wang Ningguo, who had failed in the fight, had resigned. This means that the turbulent events in this industry have finally come to an end. Yesterday, SMIC’s share price fell for the third consecutive day and fell 23% after the resumption of trading on Monday. The market value evaporated HK$4 billion.

Shuaiwei competed for SMIC, which was founded in 2000 by the two factions. It is currently the largest and most technologically advanced IC chip manufacturer in mainland China. With the passing of Jiang Shangzhou, the position of the chairman of the board of directors became the focus of the media chasing, involving a series of contradictions.

The starting point of the storm was caused by CEO Wang Ningguo's unexpected departure from the executive directorship in the regular board of directors. Wang Ningguo from Taiwan has extensive experience in the global semiconductor industry and is a well-known senior professional in the industry. In November 2009, Wang Ningguo joined SMIC and succeeded Zhang Haojing as CEO and Executive Director. After the above-mentioned disturbances were caught, the high-level layers of SMIC were sensitively divided into two groups. In addition to Wang Ningguo, there were representatives of the Taiwanese side led by COO Yang Shining.

As a veteran of SMIC, Yang Shining had more than 10 years of working experience in the chip giant Intel. He also joined Chartered Semiconductor, the world's fourth-largest chip foundry, as chief technology officer and returned to SMIC in February last year. It is reported that after the death of Jiang Zhou, Datang Telecom, the major shareholder of SMIC, pushed Yang Shining to replace Wang Ningguo, but was rejected by the board of directors.

The game between the two factions was considered by the industry as a scramble for control power among major shareholders of SMIC, and it was also a concentrated outbreak of long-term contradictions.

Wang Yang's dispute reflects the stockholders' game. According to the consolidation, the top four major shareholders of SMIC are: 19.14% for Datang Telecom, 11.6% for China Investment, 8.2% for Shanghai Industrial, and 6.543% for TSMC. The acquisition of shares in Datang Telecom and TSMC is the two major products in the same storm. In 2008, SMIC experienced a marathon patent dispute with TSMC, the world's largest chip sales contract, and SMIC, which is a dilemma, sought US$172 million in investment from Datang Telecom, which later increased its shareholding to 19.4. %, became the largest shareholder, and TSMC also took the opportunity to take shares after the victory of the lawsuit.

A number of industry insiders have revealed to reporters that Datang Telecom has always hoped to keep SMIC firmly in its hands. When Jiang Shangzhou introduced CIC to SMIC, the former quickly increased its investment to deal with equity dilution. And when Datang was holding Yang Shining not long ago, the members of the board of directors who voted against included CIC, TSMC and other representatives.

Regarding the above rumors, SMIC sent a letter to reporters stating that the members of the board of directors all agreed that they should stick to the independence of the company and also deny that there are contradictions. The other party said: "Diversified shareholders background, solidarity of the board of directors, professionalization, and international management team will surely promote the healthy and stable development of SMIC."

Zhang Wenyi's superior Wang Ningguo left many speculations. After two weeks, the chairmanship of the SMIC board of directors finally surfaced. Zhang Wenyi was outside of Wang Yang.

Zhang Wenyi, 64 years old, once served as vice minister of the Ministry of Electronics Industry. He once served as vice chairman and chairman of the Shanghai Hua Hong Group, which was responsible for investing in and constructing the first 8-inch integrated circuit chip production line in mainland China. He also served as the Shaanxi Color CRT Plant. The director and the chairman and general manager of Rainbow Electronics Group have many years of experience in the semiconductor and color picture tube industries.

Zhang Wenyi was previously appointed as a director of SMIC on June 30 and served as an executive director of SMIC on July 2. Some people in the industry believe that Zhang Wenyi's "special arrangement" during the period of SJ's involvement in the SARS is far-reaching. The announcement sent by SMIC to reporters also showed that Wang Ningguo had resigned as the CEO on the 13th and emphasized that Wang Ningguo, the core management, resigned.

Regarding Wang Ningguo’s departure, SMIC expressed “deep regret”.

In addition to Wang Ningguo’s leaving alone, SMIC responded to the outside world's query that “nearly 100 middle-level employees had left the company within the past nine months.” The person in charge said that the company currently employs about 11,000 people, including about 1,000 middle management personnel, and the turnover rate is about 10%. According to the “research report on turnover rate” in the future, the average high-tech-intensive industry has left 2009. The rate is 18.3%. "The so-called 'high turnover rate' is an exaggeration compared with the industry average."