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Asia

Another key exec exits China chip leader SMIC

It's not getting any easier for China's chip champion SMIC following the loss of its second top executive in two months.

Vice-chairman Chiang Shang-yi last week announced his departure after just ten months in the job. Three other directors also resigned, including co-CEO Liang Mongsong, who said he would stay on in his executive role.

Chiang's resignation, officially for family reasons, comes two months after chairman Zhou Zixue suddenly stepped down on health grounds, although he remains on the board.

Troubled times. Experts say SMIC is around five years behind TSMC and Samsung, who are working with the 5nm process.  (Source: Sipa US / Alamy Stock Photo)
Troubled times. Experts say SMIC is around five years behind TSMC and Samsung, who are working with the 5nm process.
(Source: Sipa US / Alamy Stock Photo)

Chiang, 75, who holds a doctorate from Princeton, was head of research at Taiwan's TSMC until 2013.

He later came out of retirement as CEO of the ill-fated Wuhan Hongxin and was then tapped by SMIC last December.

Playing catch up

Hires like Chiang are critical for SMIC if they are to narrow the gap with the foundry industry leaders TSMC and Samsung.

With its most advanced chip manufacturing capability limited to 14nm, experts say SMIC is around five years behind TSMC and Samsung, who are working with the 5nm process.

Chinese domestic media speculated Chiang's departure may have been because of the company's inability to acquire advanced lithographic equipment from ASML because of SMIC's US blacklisting.

Reportedly, SMIC's capital expenditure has plummeted 24% this year to $4.3 billion – the only major chip fab anywhere in the world to cut its investment in expansion.

The executive exodus overshadowed SMIC's healthy Q3 numbers. Once again the Hong Kong-listed firm successfully rode the rising market, growing revenue 30.7% year-on-year to $1.42 billion, with gross profit up 78.6% and gross margin 8.9 points higher. It also revised its full-year revenue growth target to around 39%.

But investors marked the stock down 5% on the news of executive departures, reflecting concern that despite gains in the mature technology markets it is yet to show signs of progress toward the leading edge.

If you build it

Meanwhile, rival TSMC has plans to build a giant new chip fab in Kaohsiung, southern Taiwan, for 7nm and 28nm processes, China News Agency reported.

The new plant, due to go into mass production in 2024, is likely aimed at providing diversification of its water supply, following shortages in other parts of Taiwan.


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The foundry firm has also unveiled plans to build a new $7 billion Japan plant in partnership with Sony, which will invest $500 million for a stake of up to 20% in the new entity.

TSMC had probably chosen Sony as a partner because of the Japanese firm's advanced contact image sensor capabilities, Ray Yang from the ITRI Industrial Economics and Knowledge Center told CNA.

The new plant, in Kumamoto, Kyushu, will also go into production by 2024, initially making 12-inch wafers using 22/28-nanometer processes, TSMC said.

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— Robert Clark, contributing editor, special to Light Reading

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