100 billion chip giant changes coach: SMIC changes 7 chairmen in 23 years,

Source: Time Weekly Author: Yang Lingling

In less than two years, the domestic wafer foundry leader SMIC (688981. SH,00981.HK) changed coaches again.

On the evening of July 17, SMIC announced that Gao Yonggang resigned as chairman and executive director of the company due to work adjustments. Liu Xunfeng, vice chairman and executive director of the company, took over as chairman. The above-mentioned personnel changes are effective July 17.

Source: Announcement of listed companies

According to SMIC, Liu has worked for a large industrial group for a long time and has more than 30 years of business management experience. However, judging from his past resume, Liu Xunfeng is not a semiconductor professional and has little relevant experience.

But for SMIC, Liu Xunfeng is not a newcomer, and earlier this year, he was recommended by SMIC's shareholder National Integrated Circuit Industry Investment Fund Co., Ltd. to serve as a director of SMIC.

Looking back, since its founding in 2000, SMIC has changed its chairman for seven consecutive years, and its board of directors and senior management have changed blood many times. Now, with Gao Yonggang fading out of SMIC, the next biggest suspense is how the 58-year-old Liu Xunfeng will steer the 100 billion giant ship. On July 18, in response to the details of the change of coach, Time Weekly contacted the relevant person in charge of SMIC several times, but did not receive a response as of press time.

"SMIC's foundry industry is capital-intensive, technology-intensive, and talent-intensive, and requires the support of governments, state-owned enterprises, investment institutions, and professional teams to successfully land, so SMIC has involved many forces and interests since its establishment." Lin Zhi, chief analyst of Wit Display, told the Times reporter that now, Liu Xunfeng, who has a state-owned background, is at the helm of SMIC, which may help reduce power competition, mobilize more resources, and accelerate the progress of SMIC's wafer foundry process.

As of the close of trading on the 18th, SMIC (688981. SH) A shares edged up 1.91% to close at 49.70 yuan per share, with a total market value of 393.9 billion yuan; Hong Kong stocks closed down 2.63% at HK$19.62 per share, with a total market value of HK$117.1 billion.

The management team is frequently turbulent

Gao Yonggang is SMIC's "old man". Since 2009, Gao has served as SMIC's Non-Executive Director, Executive Vice President of Strategic Planning, Executive Director, Chief Financial Officer and Joint Company Secretary.

As for the reason for Gao's resignation, SMIC did not mention specific details in the announcement, only stating that Gao's resignation was a job adjustment and confirmed that there was no difference of opinion with the board.

Liu Xunfeng, who succeeded Gao Yonggang, has more than 30 years of corporate management experience and served as Party Secretary and Chairman of Shanghai Huayi Group Co., Ltd., Chairman of Shanghai Huayi Holding Group Co., Ltd., Vice Chairman, Executive Director and Member of SMIC's Nomination Committee.

Behind the sudden announcement of the change of coach is SMIC's personnel earthquake that has caused a sensation in the industry in the past period.

Source: Figureworm Creative

In November 2021, Jiang Shangyi resigned as vice chairman, executive director and member of the strategy committee of the board of directors on the grounds that he "wanted to spend more time with his family". At the same time, Executive Director and Co-CEO Leung Mengsong retired from the Board of Directors and ceased to serve as an Executive Director of the Company to focus solely on the duties of the Company's Co-Chief Executive Officer.

Among them, Jiang Shangyi served as vice president and co-chief operating officer of TSMC, leading the research and development of key nodes such as 90nm, 65nm, 40nm, 28nm, 20nm and 16nm FinFET; Liang Mengsong served as TSMC's senior R&D director.

In addition to Jiang Shangyi and Liang Mengsong, Yang Guanglei, who also has experience at TSMC, also resigned as an independent non-executive director and a member of the remuneration committee in November 2021, citing his focus on other businesses.

With the resignations of the three people, SMIC's board of directors no longer has a TSMC background director. In addition, the Times reporter noted that after frequent personnel changes in recent years, SMIC's board of directors has been reduced from more than 10 to 8.

7 years of 23 years as Chairman

In 2000, Zhang Rujing, who has the reputation of "factory building maniac" in the US semiconductor industry, came to Shanghai Zhangjiang Hi-Tech to establish Chinese mainland most advanced chip manufacturing factory.

To avoid the restrictions of the Wassenaar Agreement, SMIC is registered in the Cayman Islands, and its shareholders include foreign funds such as Goldman Sachs and Walden International, as well as Chinese companies such as Peking University Blue Bird.

These capitals jointly support SMIC, but the interests of all parties are different: state-owned assets hope that SMIC can support the local industrial chain and expand social value; The rest of the capital pays more attention to the company's own profitability and hopes to realize the value as soon as possible.

"SMIC's shareholding structure has undergone many changes, its shareholding is relatively dispersed, and the inconsistent interests of shareholders may bury hidden dangers for the development of the company." Zhang Xiaorong, president of the Deepin Science and Technology Research Institute, told the Times reporter.

In 2009, as SMIC was successively suppressed by TSMC, Zhang Rujing reluctantly resigned from all positions at SMIC. At that time, SMIC faced huge fines, and the whole company was panicked. When his life hung in the balance, Jiang Shangzhou was appointed as chairman of the board of directors in danger, which calmed down the panic situation.

It's just that fate tricked people, and the prestigious Jiang Shangzhou suffered from cancer. In 2011, in the last week of his life, Jiang Shangzhou was still lying in his hospital bed and chairing SMIC's board of directors with his mobile phone. But on the eve of the shareholders' meeting at that time, Jiang Shangzhou unfortunately passed away, causing infighting that was originally hidden under the table to erupt.

A disagreement arose between SMIC's CEO Wang Ningguo and COO Yang Shining, and in the end, both Wang Ningguo and Yang Shining were out, and both were defeated. He was succeeded by Zhang Wenyi, former Vice Minister of Electronics Industry, and Ciyun Chiu, who has extensive experience in the semiconductor industry, was appointed Executive Director and CEO of SMIC.

With the cooperation of Zhang Wenyi and Qiu Ciyun, SMIC's development has once again entered a relatively stable development stage. Until March 2015, Zhang Wenyi resigned as chairman and executive director of SMIC due to his advanced age, and Zhou Zixue became his successor.

Subsequently, SMIC's path to listing underwent some changes. In May 2019, SMIC announced its voluntary delisting from the New York Stock Exchange and the deregistration of these ADR shares and related common shares. In July 2020, SMIC was listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange, becoming an A+H share model.

In September 2021, one year after SMIC's listing, Zhou Zixue retired and Gao Yonggang took over the position of acting chairman, becoming the sixth head after a half-year "buffer period". Today, Gao Yonggang, who has been in office for less than two years, has stepped down as chairman and Liu Xunfeng has become his successor.

The Times reporter's drawing material comes from public information

Lin Zhi said in an interview with the Times reporter that SMIC is one of the largest wafer foundry enterprises in China, which needs to bear greater social and national responsibilities and take into account profits, but its shareholder composition is complex and various forces are intertwined, and it is hoped that this high-level adjustment can make SMIC show better development.

Can it grow rapidly in the future?

In March this year, SMIC delivered its best annual report since listing, and its revenue and net profit in 2022 set a record.

According to financial report data, during the reporting period, SMIC achieved revenue of 49.516 billion yuan, a year-on-year increase of 39%; The net profit attributable to the parent was 12.133 billion yuan, a year-on-year increase of 13%.

However, looking forward to the global semiconductor industry in 2023, the pressure brought by the external environment is still not to be underestimated for SMIC.

Subsequently, SMIC released a quarterly report saying that its revenue in the first quarter was 10.209 billion yuan, down 14% year-on-year; Net profit attributable to owners was RMB1,591 million, down 44% year-on-year, mainly due to lower wafer sales and lower capacity utilization.

According to TrendForce consulting research, due to the continued weakness of terminal demand and the multiplication of off-season effects, the revenue of the world's top 10 foundries in the first quarter of 2023 fell by 18.6% quarterly, or about US$27.3 billion.

Among them, TSMC's first-quarter revenue was $16.74 billion, ranking first with a market share of 60.1%; SMIC, with revenue of about $1.46 billion in the same period, ranked fifth with a 5.3% market share, behind TSMC, Samsung, GF and UMC.

Behind this, there is sluggish downstream demand for chips. According to a report by Counterpoint Research, a market research agency, the global smartphone market fell 14% year-on-year to 280.2 million units in the first quarter of 2023.

Source: Figureworm Creative

During the same period, global PC shipments were 56.7 million units, down 28% year-over-year, making it the lowest quarter in the past 10 years, except for the disruption of manufacturing and production in the first quarter of 2020 due to the outbreak.

But the decline does not appear to have affected SMIC's expansion plans. As mentioned in the first quarterly report, SMIC will advance the corresponding capital expenditure in accordance with the expansion plan. At present, SMIC Shenzhen has entered mass production, SMIC Jingcheng is expected to enter mass production in the second half of the year, SMIC is expected to open the line by the end of the year, and SMIC Xiqing is still under construction.

"Looking forward to the full year of 2023, although the revenue bottomed out in the second quarter, the extent of the recovery in the second half of the year is not very clear, and overall, the market has not yet seen a full recovery, so the guidance for the full year remains unchanged, that is: the year-on-year decline in sales revenue is ten figures lower, and the gross margin is about 20%." SMIC said.

At the same time, in response to talent-related issues, at the 2023 annual general meeting held in June, Gao Yonggang said: "From the overall indicators, our talent turnover rate last year was relatively low, and this year should also be in single digits, we allow normal talent flow in the industry to occur, but we can retain key and important talents, and these people are also willing to strive on this platform." ”

As a banner bearer in the field of semiconductor foundry, SMIC has a decisive impact on the country and industry. Can SMIC, which has undergone a new board of directors adjustment, seize the opportunities of the times to grow at a faster pace?

"The outlook is uncertain for the time being. In the face of the international situation, it depends on whether it is affected by geopolitical conflicts; In the face of the market environment, it depends on when the electronic consumer market will pick up; In the face of corporate governance, it is necessary to see that the new board of directors can quickly lead the enterprise and balance the interests of all shareholders to form a synergy for moving forward. Zhang Xiaorong said.