China’s Tsinghua Unigroup, the state-owned holding company that controls most of the nation’s semiconductor assets, may snatch a co-CEO from Semiconductor Manufacturing International Corp. (SMIC) to revive a plan to build a domestic DRAM industry.

According to media reports and to people interviewed by EE Times, Tsinghua aims to hire SMIC Co-CEO Haijun Zhao to head up a new DRAM company that would combine China’s fledgling memory makers, which are struggling to survive. Despite China’s multi-billion investment to build a domestic memory industry, it lacks much of the key intellectual property needed to compete in the business.

The imminent departure of co-CEO Zhao is “pretty much confirmed,” according to a source with first-hand knowledge of SMIC’s top management who spoke on the condition of anonymity to EE Times.

He isn’t alone. “We are hearing the same thing,” said a person in China familiar with the domestic semiconductor industry who also requested anonymity. “There is a larger platform at Tsinghua Unigroup. Unless SMIC can increase the pay for Zhao, I think he will leave.”

Zhao’s annual salary at SMIC is $400,000, according to media reports. The annual salary of Co-CEO Mong Song Liang is reportedly about half of Zhao’s.

The co-CEO model at SMIC also lacks a clear division of responsibility, the source in China added. Zhao and Liang have had difficulties getting along due to differences in background and management style, according to sources who spoke to EE Times. China's Sina news news website has reported something similar. It said that owing to personal and professional differences between co-CEOs Zhao and Liang, relations between the two have been frosty.

Zhao has close ties with the Chinese government. Tsinghua Unigroup Chairman Zhao Weiguo has courted Zhao Haijun to run Unigroup’s planned DRAM operations in China, according to reports. The two Zhaos are unrelated.

The speculation on Zhao’s imminent departure prompted SMIC to issue a statement that said that Zhao and Liang remain co-CEOs.

“We condemn the media and individuals who fabricate and disseminate rumors,” Jenny Wu, a media spokesperson at SMIC, said to EE Times via email.

Tsinghua Unigroup
Tsinghua Unigroup is the largest chipmaker in China and the world’s third-largest supplier of mobile phone chips. The holding company has recently acquired a number of companies in chip design, memories and assembly and test, including Spreadtrum (which last year was renamed Unisoc). 

Tsinghua is the third-largest shareholder in SMIC after Datang Telecom and the China National IC Industry Investment Fund.

Tsinghua Unigroup may need Zhao to rescue China’s fledgling memory industry.

In 2016, Tsinghua started construction of memory fabs in Wuhan, Nanjing and Chengdu, with a total investment of nearly $100 billion. At the beginning of 2017, Tsinghua invested $30 billion to build a base in Nanjing, mainly producing 3D-NAND flash and DRAM memory.

The Nanjing fab, however, has yet to be built. Local reports from China say that “after completion, it will be China's largest chip manufacturing plant, with a monthly output of 100,000 12-inch wafers.”

Tsinghua Group has hired a number of well-known industry executives recently as it aims to scale up semiconductor production, according to a March 9 report on Sina. Recent hires include former United Microelectronics Corp. (UMC ) CEO Shih-Wei Sun, former ZTE Executive Vice President Zeng Xuezhong and former HiSilicon Chief Strategy Officer Steve Chu.

Zhao is expected to resign soon and join Tsinghua, according to the Sina report. The report said the Tsinghua Group had no comment.