Problems are growing at SMIC
HONG KONG - Semiconductor Manufacturing International Corp (SMIC), China's biggest chipmaker, said its chairman died, the chief executive officer was voted off the board and the company asked for a stock trading halt.
Shareholders rejected CEO David Wang's reappointment as a board director and the company requested that its shares be suspended from trading in Hong Kong pending the release of "price-sensitive" information, the Shanghai-based chipmaker said in statements on Thursday. A day earlier, it announced that Chairman Jiang Shangzhou died on June 27.
Wang, who was appointed CEO in November 2009, helped SMIC return to profitability last year after the company posted five straight annual losses under founder Richard Chang. In April, China Investment Corp, the nation's sovereign wealth fund, agreed to invest $250 million in the chipmaker.
"It leaves open the question of whether the CEO will remain at the company if he is not on the board," said Steven Pelayo, who rates SMIC shares "neutral" at HSBC Holdings Plc in Hong Kong. Holders of 5.33 billion SMIC shares, or 58 percent of the votes cast at Wednesday's annual general meeting, opposed Wang's reappointment, the company said. Shareholders also rejected proposals to renew the board's authority to issue new stock or repurchase shares, it said.
SMIC shares rose 3.3 percent to 63 Hong Kong cents (8 cents) on Wednesday. They've gained 13 percent this year, outperforming the Hang Seng Index, the Hong Kong benchmark.
SMIC shareholders include State-owned Datang Telecom Technology & Industry Holdings Co and Shanghai Industrial Investment (Holdings) Co.
In February, SMIC posted its first annual profit since 2004, as the global economic recovery boosted demand for chips that are used in mobile phones and computers. The company said it would increase capital spending to $1 billion this year to upgrade technology and catch up with bigger rivals including Taiwan Semiconductor Manufacturing Co.
Bloomberg News
(China Daily 07/01/2011 page16)
