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When Liang Mong-song threatened to step down as co-general manager of China’s largest chipmaker, it was an extraordinary moment, even for the notoriously hot-tempered industry veteran.
The departure of Mr. Liang, 68, who joined Semiconductor Manufacturing International Corp in November 2017, would have seen defeat in his quest to help China’s largest chipmaker catch up with international rivals such as Taiwan Semiconductor Manufacturing Corp and Samsung Electronics.
Last month what seemed like a resignation by Mr. Liang circulated on Chinese social networks, touching the actions of the minimum wage. Mr. Liang appears to be staying – he was included in the latest public list of SMIC directors and officers, dated December 31. According to people close to him, negotiations are underway within management over the resources and future direction of the company.
But the episode highlighted how China’s strategy to build self-sufficient, the world-class semiconductor manufacturing industry is heavily dependent on engineers and executives poached by Taiwanese competitors.
Taiwanese talent has been the lifeblood of China’s chip industry ever since Richard Chang, a high-level industry leader in Taiwan, founded SMIC in 2000 and hired a team of engineers from TSMC, the largest contract chip maker. in the world.
Mark Li, Hong Kong-based analyst at investment bank Bernstein, estimates that “easily hundreds, if not thousands, and if you include semiconductor design, maybe even tens of thousands” of employees Taiwanese are now working in the Chinese chip industry.
China needs this expertise to help it run manufacturing plants and develop more advanced process technology, which Taiwan has perfected.
According to former colleagues and analysts, Liang is one of the most seasoned and technologically brightest executives in the industry, after long stints at TSMC and Samsung in South Korea. It also significantly accelerated The technological prowess of the minimum wage, bringing the mass production of 28-nanometer chips to less than 10nm in just over three years. This represents a significant leap in the miniaturization of semiconductor technology which has taken much longer to overcome its competitors.
Obsessive dedication
People who know Mr. Liang attribute this success to his almost obsessive dedication to technology. This has earned him respect but also frequently arouses conflicts with his colleagues. “We are moved by his enthusiasm for the work,” said an engineer from the SMIC.
“He is very strict on technology, very rigorous. Its demands are very high, ”said Charles Hsu, president of Taiwanese semiconductor company eMemory and friend of Mr. Liang. “He’s like, ‘That’s the requirement. You have to answer that. There is no negotiation. But if [you use] this personality to deal with other people, then it’s very difficult.
As the United States tries to block the development of China from advanced chip manufacturing through sanctions and export bans, this kind of expertise is more important than ever. “Chinese demand for Taiwanese semiconductor executives and engineers will increase. They will poach even more aggressively, ”said a Western expert who follows the industry on both sides of the Taiwan Strait.
The United States has blocked supplies equipment SMIC needs to manufacture chips with processes more advanced than 10nm – exactly the area Mr. Liang is developing within the group.
In response, China has focused on expanding the manufacturing capacity of older chip technologies and reduce dependency on foreign software and machines. Last month, SMIC unveiled a joint venture with two Chinese state funds that will invest $ 7.6 billion in a new, more mature chip manufacturing plant, which the company classifies as 28nm or larger.
But this pivot was a setback for Mr. Liang. He frequently had disagreements on strategy with his Chinese co-general manager Zhao Haijun, since Mr. Liang’s mission has been to help the minimum wage to catch up technologically with its rivals. People directly familiar with the minimum wage said any strategic change that diverted resources away from this goal would undermine Liang’s position.
‘The direction of the whole industry this year is not in line with advanced process technology [Mr Liang] has grown in those years, ”said an engineer from the SMIC.
Describing Taiwanese working in Chinese chip companies as “mercenaries” who left ship for much higher pay, a former TSMC executive said senior officers such as Mr. Liang were responsible for researching the influence and resources of the young Taiwanese managers and engineers they brought with them.
“In this situation, he has to fight – not only for himself but also for his people,” the person said.
Threat of resignation
In his letter to the board last month, Liang blamed his threat of resignation on the fact that the SMIC had not consulted him about hiring Chiang Shang-yi, his former boss at TSMC, as his as vice president. “I think you probably don’t need me anymore to work hard and fight for the future of the business,” he wrote.
When Mr. Chiang retired as TSMC’s executive vice president for research and development in 2006, Mr. Liang was ignored as his successor and then left to join Samsung. The SMIC did not explain its justification for hiring Mr. Chiang.
People who know Liang said he saw the high-level post at the minimum wage as a chance to lead extraordinary technological advancements – an opportunity he believed had previously been overlooked at TSMC.
“If he really leaves the minimum wage now, the mission he has embarked on with so much passion will have failed,” said the former head of TSMC.
It could mean a broader failure of Chinese efforts to build a chipmaking industry out of Taiwanese talent.
“Many Taiwanese companies, first and foremost TSMC, have [now] added legal and financial obstacles against people leaving for Chinese rivals, ”he said. “It’s almost impossible that there will be another song by Liang Mong.”
Additional reporting by Qianer Liu in Shenzhen
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