Last updated: November 11, 2009 12:51 am

Richard Chang quits as SMIC chief

Richard Chang, who had tried to challenge the world’s largest contract chipmaker with a rival operation in China, bowed out on Tuesday following the settlement of long-running patent litigation.

Mr Chang resigned as chief executive of Semiconductor Manufacturing International (SMIC), China’s largest chipmaker which he founded nine years ago, after Taiwan Semiconductor Manufacturing (TSMC) agreed to settle a long-running trade secrets battle with a $200m payment from SMIC and a 7.4 per cent stake in the Chinese company.

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The agreement underscores the compromises the Chinese market is forcing upon multinationals.

TSMC’s lawyers had said they would demand more than $1bn in damages from SMIC for stealing trade secrets, an allegation denied by SMIC but confirmed by a California court ruling last week.

But sources close to the situation said a damages ruling for such an amount would not have been enforceable in China, and TSMC, which also has a plant in Shanghai and customers in China, could have faced retaliation from the Shanghai government, SMIC’s second-largest shareholder.

“This time it’s settled for good,” said Matthew Szymanski, SMIC vice-president. “This is not going to be re-litigated because [TSMC] is an investor now.”

The departure of Mr Chang, a former TSMC executive, completes the transfer of SMIC to a new leadership after Wang Yangyuan, his fellow founder, was replaced by a representative of the Shanghai municipal government as chairman in June.

“This was an additional pressure in a high-pressure situation” for SMIC and Mr Chang, said Mr Szymanski. “Maybe his heart was no longer set on the nuts and bolts of the high-pressure business of running this company.”

Industry sources said Mr Chang had been forced to leave because SMIC’s major shareholders were increasingly unhappy with his strategy of building a scattering of fabrication plants all over China with the support of different local governments.

Mr Chang is being replaced by David Wang, former chief executive of Huahong, SMIC’s smaller peer.

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