SMIC's new CEO: Best fit, but work ahead

SMIC has officially named a new CEO to replace David Wang who resigned last month after what amounted to a no-confidence vote. Tzu-Yin Chiu, who also becomes an executive director of the company, comes with nearly three decades of experience in the semiconductor industry, most recently:

• Hua Hong NEC Electronics (president/CEO)
  
• Shanghai Huali Microelectronics (president/CEO)
• Silterra Malaysia (president/COO)
• Hua Hong International Management (SVP/COO).

He was at SMIC from 2001-2005 as SVP of Shanghai operations, and before that was TSMC's senior director of fab operations. At the start of his career he was department head of AT&T Bell Labs' high-speed electronics research department.

SMIC chairman Zhang Wenyi touted Chiu's "extensive technical and management experience in the semiconductor field, as well as his in-depth knowledge of SMIC and the Chinese semiconductor industry." Chiu himself says his mission "is to further improve SMIC's operations, customer support, technology offerings, and market competitiveness, while continuing to develop long-team strategic relationships with key customers." He also pledges that SMIC will play a more important role in the global semiconductor foundry sector.

Chiu "is a very good choice and probably the best solution for SMIC," says Samuel Tuan Wang, analyst at Gartner -- and former SMIC exec himself, having led SMIC America operation for eight years. He has "great leadership skill," and "is well liked by employees and customers." His prior experience at SMIC and close work with the Shanghai government while at HHNEC also help his cause.

When David Wang stepped down, there was some concern that there might be a power struggle between Taiwanese and Chinese management, with the move perhaps indicating a strategic swing in favor of more domestic leadership. Chiu actually comes from Taiwan, Gartner's Wang noted, which suggests both Datang and CIC think he's the best candidate on either side of the Strait. He also noted that Wang's predecessor at SMIC, Richard Chang, recruited a lot of Taiwanese managers, but also promoted many Chinese as well. Ultimately any recent turmoil in SMIC's business can be more directly attributed to a loss of wafer business from TI once Nokia dropped the Symbian platform -- pushing SMIC's fab utilization rate below 80% -- and less to internal strife, he suggested.

SMIC needs to move away from its reliance on customers who develop internal IP (customer-owned tooling, or COT) and focus on its more leading-edge technology (which hasn't had enough R&D funding) and winning more customers there, he suggested.

But Chiu's appointment may not simply calm the waters around SMIC. He may be the best candidate, but he'll need to form his own team, Gartner's Wang noted. "I think that some key managers will leave. Lack of experienced managers will be the issue now." With a still-unsettled and possibly political atmosphere, "many experienced managers (from Taiwan or from the US) will hesitate to join SMIC," he suggests. "Chiu will have a very challenging job ahead."