– SMIC asks TI to take over fab management, says report – SMIC asks TI to take over fab management, says report.

LONDON — Foundry Semiconductor Manufacturing International Corp. (Shanghai, China), is planning to end an agreement to manage a 200-mm wafer fab in Chengdu, according to a Reuters report.SMIC has been talking to Texas Instruments Inc. (Dallas, Texas) about taking over the operation of the fab, which Reuters said is government-owned.

The situation in Chengdu is unusual because SMIC does not own the wafer fab in an arrangement that dates back to 2005. SMIC set up the 200-mm wafer fab, Cension Semiconductor Manufacturing Corp. to be managed by SMIC and backed by investors.

SMIC made a net loss of $482 million on revenue of $333.1 million in the fourth quarter of 2009 and it is said that the change at Chengdu is part of a response by incoming management to bring SMIC back into profit.

As well as owning wafer fabs in Shanghai and Beijing SMIC agreed to set up and manage a number of fabs as local authorities across China sought to promote the development of their regions with semiconductor manufacturing. In 2006, SMIC began construction of a 300-mm wafer fab in Wuhan Hubei Province, China. This fab, the first in Central China, was intended to be paid for by the local authorities with SMIC being asked to manage the facility. And in 2008 SMIC struck a deal with the Shenzhen municipal government under which the foundry provider would build separate 200- and 300-mm fabs and manage them for the owner, the Shenzhen municipal government.

The fab management business model was pursued SMIC founder and CEO at time Richard Chang. Chang resigned in November 2009, following an unfavorable settlement over a legal dispute with foundry market leader Taiwan Semiconductor Manufacturing Co. Ltd. Chang was immediately replaced by veteran industry executive David N.K. Wang.

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