* 58.2 pct shareholders vote against re-electing CEO David
Wang to board
* SMIC chairman passed away on June 27
* Top management change likely - analysts
* SMIC shares suspended on Hong Kong stock exchange
(Adds details, quotes)
By Melanie Lee
SHANGHAI, June 30 China's Semiconductor
Manufacturing International Corp may be in for
a top management shakeup after shareholders voted its chief
executive off its board and the death of its chairman this week.
SMIC, China's biggest contract chipmaker, said 58.2 percent
of the shareholders voted against re-electing its Chief
Executive David Wang to the board at a meeting on Wednesday.
Shares of the company were suspended on Thursday on the Hong
Kong stock exchange. The stock has lost 6.6 percent so far this
year, compared with a 2.8 percent fall in the Hang Seng Index
"It seems unlikely to me that David would want to remain CEO
if he can't also be a director so I imagine there is probably a
big management shake-up going on right now," said Steven Pelayo,
Regional Head of technology research at HSBC in Hong Kong.
Wang was hired in 2009 to replace SMIC's founder Richard
Chang. With a strong industry background, Wang was tasked with
turning around the company which faces stiff competition from
Taiwanese rivals TSMC and UMC
Analysts said the large swing of votes against re-electing
Wang indicates that one or all of the major shareholders, such
as government-owned Datang Telecom and China's sovereign wealth
fund China Investment Corp, had voted against him.
China Investment Corp holds around 13 percent in
SMIC via convertible preferred shares, analysts said.
"The company is considering the implications of the
non-appointment of its executive director and will make further
announcement(s) of any material developments," SMIC said in a
On Tuesday, SMIC said its chairman Jiang Shangzhou had
SMIC said in March it plans to invest $12 billion on
capacity expansion over the next five years as it aims to
achieve sales of $5 billion by 2015.
"There being two (major) shareholders, one being a proxy to
the government, Datang Telecom, and the other CIC, both of them
choosing not to elect Wang means possibly there is enough scope
to get someone else and push him out," said Hong Kong-based CLSA
analyst Vaibhav Dhasmana.
Some analysts say SMIC would find it difficult to face the
fierce competition from market leaders such as TSMC which have
been quick in investing in the latest technologies and keeping
In the first quarter ended March, SMIC's revenue was $370.6
million, significantly smaller than TSMC's net sales of $3.6
billion and UMC's $956 million. Taiwan Semiconductor
Manufacturing Co Ltd and United Microelectronics Corp are the
world's top two contract chip makers.
"I think there is enough bad news for SMIC from a
fundamental business perspective. This is something that
incrementally adds on negativity," Dhasmana said.
(Additional reporting by Jimmy Tsim in HONG KONG; Editing by
Kazunori Takada and Vinu Pilakkott)