Top exec Wang out at SMIC

July 18, 2011 – Less than a month after essentially receiving a no-confidence vote, SMIC president/CEO David N.K. Wang has resigned all his duties after two years at the helm. The Chinese foundry’s chairman Zhang Wenyi will be acting CEO as the company searches for a permanent replacement; he recently took over as chair after the death of sitting chair Jiang Shangzhou. (With his appointment, SMIC is now without a required third independent non-executive director, a void that will the company says will be filled "as soon as practicable.")

Zhang was previously chairman of Shanghai Hua Hong, China’s first 200mm foundry, and served as chair of Shanghai Hua Hong NEC during its transition into a foundry services company. He has also served as Vice Minister of China’s Ministry of Electronics Industry.

Wang’s departure from SMIC comes after shareholders’ surprise rejection of his reappointment to the company’s board (58.2% to 42.8%) in late June. (By comparison, Datang CFO Gao Yonggang was overwhelmingly reelected as a Class I nonexecutive director with 97.5% approval). Speculation was that the large vote-against suggested backing from either or both of SMIC’s major investors, government-backed Datang Telecom and CIC, and that Wang might indeed step down if he couldn’t serve as a director. He joined SMIC in late 2009, after two years at Huahong and Huahong NEC; prior to that he was EVP at Applied Materials responsible for the company’s Asia strategy.

In a letter to SMIC shareholders, Wenyi said the company "is at a new stage of further accelerating its development," and that these "sudden and unexpected" changes "facilitated thorough and serious re-examination of the role of SMIC as well as its future direction." At the June 30 vote, shareholders also struck down (in convincing voting) three separate share fundraising proposals, which would have granted board members with power to issue and repurchase shares, perhaps to fight stock dilution.

SMIC also is clarifying what it says are "recent press commentaries" about middle-management layoffs, confirming that the reported ~100 attrition occurring in the past nine months represented only about 1% of its overall workforce of 11,000, involved no other senior management (besides Wang), and characterized the moves as "the normal course of business due to the competitive business nature of the industry."


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