China's largest contract chipmaker, Semiconductor Manufacturing International Corp (SMIC), said yesterday that its long-serving CEO has stepped down, in a bid to restructure the company that had posted losses over the past two years.

Richard Chang, the company's founder, will leave the firm to pursue other interests, according to a statement from SMIC. Chang will be replaced by David Wang, a 63-year-old director at Solar Fun Power Holdings.

Chang's resignation came shortly after the Shanghai-based chip maker said it would pay rival, Taiwan Semiconductor Manufacturing Co (TSMC), US$200 million as part of a deal to settle a long-running legal dispute.

TSMC and SMIC yesterday informed a judge in Oakland, California, that they had settled a case in which TSMC accused SMIC of stealing trade secrets. SMIC also agreed to pay TSMC an undisclosed amount in stock and warrants.

"We are pleased to have Dr Wang as our new leader at SMIC. The wealth of experience and knowledge in the semiconductor industry he brings with him will help foster further growth of SMIC in China and the world," said Jiang Shang Zhou, chairman of SMIC, in a statement yesterday.

Founded in 2000 by Chang, SMIC is the largest foundry in the mainland and gets significant support from the Chinese government, which has long been trying to build up its high-value-added technology industries.

However, after getting off to a relatively strong start, SMIC has languished over the last few years, as competition with more established rivals such as TSMC and the industry's second largest player UMC intensified. SMIC recorded 16 quarterly losses over the last 17 quarters.

The company last month reported its third quarter loss widened to US$69.3 million as the global recession damped chip demand. Chang said last month that the company was expected to post a full-year profit in 2010 as depreciation costs drop and orders increase.

According to SMIC, Wang is a former executive at Applied Materials, the world's leading supplier of chipmaking equipment. From 2006 to 2007, Wang headed Huahong NEC, another Chinese chipmaker.

Reuters said in a report that the appointment of Wang could pave the way for consolidation in China's chip sector, citing industry analysts.