Tue, Aug 29, 2006 - Page 1 News List

TSMC sues SMIC for failing to live up to 2005 accord


Taiwan Semiconductor Manufac-turing Co (TSMC) said yesterday that it has filed a suit against Semiconductor Manufacturing International Corp (SMIC) for what it deemed a breach of a patents and trade secrets settlement reached last year.

Despite last year's accord, SMIC has continued to make use of TSMC's business secrets, the world's largest contract chip maker said in a filing to the Taiwan Stock Exchange.

TSMC and its affiliates TSMC North America and WaferTech filed the suit against SMIC and its affiliates SMIC Shanghai, SMIC Beijing and SMIC Americas in the California Superior Court of Alameda County last Friday.

The Hsinchu-based chipmaker is seeking compensation for damages incurred and an injunction against its Shanghai-based rival.

"They have not followed the agreement of 2005," TSMC spokesman Tzeng Jinn-haw (曾晉皓) said in a telephone interview. "Besides that, we have no further information."

Early last year, TSMC settled patent and trade secret litigations with SMIC, which agreed to pay US$175 million in instalments over six years.

The two parties also agreed to cross-license each other's patent portfolio through December 2010.

Analysts said TSMC's latest action against SMIC highlights the hurdles faced by the firm in China, where the Taipei government limits the level of technology that can be transferred.

So far TSMC is the only Taiwan-based wafer foundry which has been granted approval by Taipei to invest in China.

TSMC controls 50 percent of the world's market for customized chips, while SMIC, the industry's fourth-biggest manufacturer, holds 7 percent, according to researcher IC Insights.

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