China’s Largest Foundry, SMIC, Loses Four Executives

Four members of board of directors at Semiconductor Manufacturing International Co.'s (SMIC), China's largest contract maker of semiconductors, left this week. After the U.S. Department of Commerce included SMIC on its Entity List and effectively banned the company from receiving any U.S.-developed technology without a special license, executives and directors have been fleeing the foundry. 

The four who left the board include the company's co-CEO Liang Mong-Song (a former high-ranking executive from TSMC and Samsung) and vice chairman Chiang Shang-Yi (a former R&D chief from TSMC), reports Nikkei. Two important directors leave SMIC just two months after Zhou Zixue, the company's chairman, resigned from his role.

Liang Mong-Song explained that he resigned from the board in a bid to focus on discharging his duties as the co-CEO as he retains his executive role, whereas Chiang Shang-Ui said he wanted to spend more time with his family. In addition, Zhou Jie, a non-executive director, and Young Kwang Leei, an independent non-executive director, resigned as they wanted to focus on other business matters. 

Hiring of Chiang Shang-Yi was a big deal last year as the company needed an experienced R&D executive in a bid to shape its further research and development strategy now that it cannot get access to manufacturing tools required to develop sub-10nm fabrication technologies and produce appropriate chips. One idea that Chian Shang-Yi proposed was to focus R&D efforts on advanced packaging technologies and heterogeneous integration as the company was not going to get equipment required to use extreme ultraviolet lithography (EUVL) any time soon. 

Since SMIC cannot compete against TSMC or Samsung foundry for leading-edge nodes and does not have many specialized process technologies to properly rival specialty foundries like GlobalFoundries and UMC, it recently focused on mature process technologies and started to build two major fabs in China (including the country's largest fab).

These fabs are built in collaboration with local authorities, but given how important the semiconductor industry is for the Chinese government, it is ready to pour in money into the projects if needed. This will make SMIC, which is formally an independent company with a significant percentage of its stock owned by government-controlled entities, even more dependent on the central government and this is not something that its executives directors want.