Taiwan's TSMC Sues China's SMIC For Patent Breach

Taiwan Semiconductor Manufacturing Co. (TSMC) said Aug. 28 it has filed a suit against China's Semiconductor Manufacturing International Corp (SMIC) for what it deemed a breach of a patents and trade secrets settlement reached in 2005.

Despite the 2005 accord, SMIC has continued to make use of TSMC's business secrets, the world's largest contract chipmaker 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 at a California court on August 25. The company is seeking compensation for damages incurred and an injunction.

In early 2005, TSMC settled patent and trade secret litigations with SMIC, which agreed to pay $175 million in installments 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 mainland China, where the Taipei government limits the level of technology that can be transferred.

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

Copyright Agence France-Presse, 2006

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