Sunday, May 16, 2021

Shares of leading Chinese chipmaker plunge after co-CEO leaves without warning

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Semiconductor Manufacturing International Corp. plunged nearly 10% on Wednesday after revealing he had examined reports of a senior executive’s surprise resignation.

China’s largest chipmaker said it was trying to reach out to co-CEO Liang Mong Song after online media circulated a resignation letter they said came from the industry veteran. Liang resigned after the SMIC appointed a vice chairman of the board without consulting him, according to reports. The company is now trying to clarify its intentions, she said in an exchange brief without giving details. Liang could not be reached immediately for comment.

Shanghai SMIC shares fell 7.2% after trading as low as 9.8%, the most intraday in three months. Its stock has been suspended from trading in Hong Kong. Liang resigned after learning of the appointment of Chiang Shang-yi – a former senior executive of a bigger rival Taiwan Semiconductor Manufacturing Co. – to the board of directors, media including Digitimes of Taiwan reported.

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Liang, a TSMC alumnus, was seen as an integral part of SMIC’s efforts to become a major player in the wafer manufacturing industry for global tech giants. The Shanghai-based company, supplier of Qualcomm Inc. and Broadcom Inc., is at the heart of Beijing’s intention to build a world-class semiconductor industry and wean itself from dependence on American technology. But it is now also among a plethora of Chinese companies that Washington haslabeleda threat to national security, a designation that threatens to cripple its long-term ambitions by denying it access to essential equipment and circuits.

“Recent technological advancements in the SMIC were directly attributable to Liang,” wrote analysts at Bernstein, including Mark Li. “While Chiang’s addition is positive, as vice president his role is advisory. Liang, however, personally led the technological development of the SMIC, and his contribution directly resulted in the mass production of 14nm, for example. Considering the two, we believe that Liang’s departure will have a bigger effect and that future technological advancements of the minimum wage may suffer a setback. “

Chinese tech companies including Huawei Technologies Co. have been caught amid rising tensions between the two countries, which have clashed over a host of issues ranging from trade to the coronavirus pandemic and a security law. imposed by Beijing on Hong Kong.

In response to the widening US crackdown, China plans to provide broad support for so-called third-generation semiconductors in its upcoming five-year plan to increase national self-sufficiency in chipmaking, according to people with knowledge of the industry. subject.

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