Ningbo Semiconductor International Corporation, an affiliate of China's top chip maker Semiconductor Manufacturing International Corporation (SMIC), said on Tuesday that it refuses to show mercy to two former executives, including ex-chairman and founder Herb Huang He, who was sentenced to four years in prison for abuse of funds.

In one of the most dramatic and mysterious boardroom battles, Huang was ousted by the company last summer for misappropriation of funds, and he was sentenced to prison by a local court in November.

Huang, a former US citizen who holds a PhD in materials science and engineering and an MBA from the University of Minnesota, was once regarded as a hero in the Chinese semiconductor industry. His downfall is now a cautionary tale about the complicated vested interests that plague the domestic industry.

Herb Huang He, founder of Chinese chip designer Ningbo Semiconductor International Corporation, was ousted last year over alleges misappropriation of funds, resulting in a four-year prison sentence. 

In a statement on Tuesday, Ningbo Semiconductor disclosed information about Huang and Wang Ying, the former financial chief of the company, being sentenced to four years in an initial ruling on charges that also included accepting bribes. Huang and Wang say they will appeal, according to local media.

The chip firm said it has "repeatedly made statements to related parties that the company will not enter into any settlement or understanding with Huang and Wang", as it has "zero tolerance" for criminal activity.

Most details of the case and how funds were misappropriated remain unknown, as the Ningbo court has not made case documents publicly available. The South China Morning Post could not reach Huang for comment.

According to Huang's LinkedIn page, the entrepreneur spent three years at US hard drive maker Seagate Technology before joining SMIC in 2002. He focused on micro-electromechanical systems (MEMS) sensors, complementary metal-oxide-semiconductor (CMOS) memory and 3D integrated circuits for 14 years at SMIC before he founded the Ningbo company in 2016.

Ningbo Semiconductor is China's leading chip designer, focusing on special-process semiconductors. It is mainly engaged in 5G communications and mobile terminals, intelligent home appliances and industrial control, industrial Internet of Things and medical electronics, according to its official website.

SMIC has cut its equity holding in the company to about 16 per cent. Other investors include China IC Capital, a wholly-owned investment fund under SMIC, as well as industry funds Ningbo Senson Electronics and Hua Capital. It also received a 500 million yuan (US$69 million) investment from the National Integrated Circuit Industry Investment Fund, known as China's Big Fund.