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Shares in China’s biggest chipmaker drop on reports co-CEO has quit

Shares in China’s biggest chipmaker drop on reports co-CEO has quit

Shares in China’s biggest chipmaker fell sharply after it said it was “verifying” reports that its co-chief executive had abruptly quit, in what would be the latest blow to the company following US sanctions.

Semiconductor Manufacturing International Corporation’s stock fell as much as 9.8 per cent in Shanghai on Wednesday after the group said that it had “noticed media reports” that Liang Mong-song, co-chief executive, had resigned.

“The company understands that Dr Liang wishes to resign under certain conditions . . . and is actively verifying Dr Liang’s true intentions,” SMIC said in a filing to the Shanghai stock exchange.

Trading in the group’s Hong Kong-listed shares was suspended on Wednesday. The Shanghai-listed stock trimmed losses to trade 7 per cent lower in late-morning trading.

The resignation of Mr Liang would be another setback for SMIC after the US slapped sanctions on the company in September, blocking its access to crucial American technologies. The Trump administration said at the time that exports to SMIC posed an “unacceptable risk” of being diverted to “military end use”.

On Tuesday, index provider MSCI said it would delete SMIC’s shares from its stock indices, which are followed by trillions of dollars of funds, due to the group’s alleged military ties.

Mr Liang had joined SMIC in 2017 and was leading the company’s push into the kind of advanced chips manufactured by Taiwan and South Korea. SMIC is at the forefront of Beijing’s ambitions for greater self-sufficiency in semiconductors.

In what appears to be a resignation letter circulated on Chinese social media, Mr Liang said SMIC’s decision to hire Chiang Shang-yi as vice-chairman had pushed him to quit. Mr Chiang was previously vice-president of research and development at Taiwan Semiconductor Manufacturing Corporation, the world’s most advanced chipmaker, whose technology SMIC aims to rival.

“I was completely astonished and puzzled, because I had heard nothing about this beforehand. I deeply feel that I am no longer respected and trusted,” stated the letter. It added that SMIC’s chairman called Mr Liang a week ago to tell him about the hiring of Mr Chiang.

SMIC declined to comment on the veracity of the letter.

Mr Chiang’s position was confirmed on Wednesday, according to a Shanghai bourse filing by SMIC. Mr Liang was the only director to not cast a vote on his appointment, it said.

“SMIC currently faces all sorts of pressures from the US, causing serious threats to our development of advanced technology. I think that today’s personnel proposal will inevitably affect the company’s prospects,” said Mr Liang’s apparent resignation letter.

Mr Liang had previously worked underneath Mr Chiang at TSMC, before the former moved on to Samsung Electronics and then SMIC.

It would not be the first time Mr Liang has been embroiled in internal politics at SMIC. In 2019, he and co-chief executive Zhao Haijun battled over whether the company should develop costly cutting-edge technology in line with Beijing’s policy aims as Mr Liang wished, or instead focus on mature and more commercially viable areas.

Mr Liang gained the upper hand and scores of executives were replaced to align management more closely with his goals, according to people directly familiar with the matter, and Mr Zhao considered quitting as a result.

Additional reporting by Qianer Liu in Shenzhen