Zhang Rujing: SMIC CEO resigned from his post

On October 10, Semiconductor Manufacturing International Corporation (SMIC) declared that its CEO Zhang Rujing had already resigned and Wang Ning will take his place. Wang will also take the post of corporate president. On the same day, SMIC signed reconciliation agreement with Taiwan Semiconductor Manufacturing Corporation(TSMC), according to which SMIC will pay 200 million US dollars to TSMC in four years. After the deal, TSMC will have 10% shares of SMIC.

Previously, TSMC accused SMIC of patent infringement and misappropriating business secrets and won the litigation in the USA. From 2003, TSMC and SMIC had continuous conflicts with each other. In 2005 they reached a reconciliation agreement, which failed them and brought about more lawsuits. Therefore, it is believed that Zhang’s resign was related with these lawsuits.

However, the main reason to explain Zhang’s resign is the dissatisfactory performance of SMIC, which has seen losses for ten consecutive quarters. The compensation to TSMC pushed SMIC into a more troublesome situation. In October, SMIC forecasted that the company will see profits in the third quarter of 2010 after the improvement of product structure.

Zhang was called the “Father of China’s semiconductor industry”. He once worked in Texas Instruments for 20 years and helped this company build chip factories in America, Japan, Singapore, Italy and Taiwan. In 1997 he joined in Shida as the general manager. In 2000, TSMC acquired Shida and Zhang left it.

In February 2000, Zhang Rujing got the support from the Chinese government in capital and land to start SMIC. In Shanghai he built the first 8-inch chip factory in China. The factory was put into production in one year, which was called a miracle at that time. His resignation signified the failure of his plan to build SMIC into an equal competitor against TSMC.