Mon, Aug 23, 2004 - Page 10 News List

MStar back to beginning with Genesis

LEGAL ENTANGLEMENTS Taiwan's biggest maker of controllers for flat displays says it will appeal a decision by the International Trade Commission in US federal court

By Lisa Wang  /  STAFF REPORTER , WITH BLOOMBERG

MStar Semiconductor Inc (晨星科技), Taiwan's biggest maker of controllers for flat displays used in computers and televisions, said yesterday it plans to file an appeal against a patent infringement ruling that favors the plaintiff -- Genesis Microchip Inc.

Under a ruling by the International Trade Commission (ITC) over the weekend, MStar Semiconductor, along with its Taiwanese peers Media Reality Technologies Inc (晶捷科技) and Trumpion Microelectronics Inc (創品), were found guilty over infringing on a patent for a method to improve images on liquid-crystal-display (LCD) monitors.

The company has been challenging Genesis Microchip, the world's top supplier of such controllers for LCD computer monitors and flat-screen TV sets, for over a year.

The Hsinchu-based chipmaker said in response that, "MStar believes that the ITC's decision is wrong and plans to appeal the decision in US Federal Circuit Court."

The trade commission also issued an order to embargo imports of the company's display controllers into the US, as well as computer and TV screens that contain the products.

US officials will begin blocking the goods in 60 days.

"There will be no disruption to imports of new MStar chips or display monitors containing our new chips," MStar President Steve Yang (楊偉毅) said.

The new products were not implicated in the ongoing patent lawsuits, he said.

One market watcher said the import ban will eat into the company's bottom line and limit its development of new chips.

"The import restriction will take a serious toll on the chipmaker, as controllers used in computer monitors and TVs make up a big chunk of the MStar's sales," said David Liu (劉志清), a deputy manager at a securities department of Industrial Bank of Taiwan (台灣工銀).

Liu said local chipmakers should brace for more patent disputes as larger international rivals use legal means to thwart Taiwanese startups, which are generally more cost-competitive.

Five months before the ITC's ruling, Media Reality applied to terminate share trading on Taiwan's emerging-market bourse in March, as it was unable to sustain huge losses from law suits with Genesis. Trumpion Microelectronics also decided to phase out production of its LCD controllers as a result of legal pressure.

As of press time, Media Reality and Trumpion Microelectronics could not be reached for comment about the ruling.

"We are delighted with the ITC's decision to uphold the findings of the administrative law judge," Eric Erdman, an interim chief executive officer at Genesis Microchip, said in a statement yesterday.

Genesis Microchip shares rose US$0.63 to US$12.58 at 5:20pm on the NASDAQ share market. The shares have fallen 30 percent in the past 12 months.

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