Report: SMIC fires back with TSMC suit

November 17, 2006 – In the latest salvo between the industry’s juggernaut foundry and an upstart rival, Chinese flagship foundry Semiconductor Manufacturing International Corp. (SMIC) has filed suit in the Beijing High Court against Taiwan Semiconductor Manufacturing Co. (TSMC), alleging unfair competitive practices, “breach of good faith,” and “commercial defamation,” according to an Associated Press report.

In the lawsuit, SMIC demands an injunction to stop TSMC’s alleged infringement upon SMIC’s legal rights to compete fairly in the marketplace. The chipmaker also seeks a public apology and unspecified compensation including “profits gained by the defendants from their infringing acts,” according to the filing.

The two firms had fought via lawsuits since late 2003 concerning patents and trade secrets, including charges that SMIC hired dozens of former TSMC employees, some of whom allegedly took secret company information with them, including coded references to TSMC best practices.

An agreement in January 2005 was supposed to end the dispute, with SMIC paying $175 million over six years, plus a cross-licensing deal through 2010. However, in August 2006 TSMC renewed its litigation against SMIC citing a breach of that settlement.

SMIC has continuously refuted TSMC’s accusations of technology theft, and last month presented a list of what it claims are the sources for its various process technologies, according to a DigiTimes report. For its logic ICs, SMIC credits Singapore’s Chartered Semiconductor (0.18-micron) and Motorola (0.13-micron and 90nm, inherited from acquiring Motorola’s MOS-17 fab in Tianjin). And for memory processes, SMIC claims it has licensed technology from Fujitsu (0.20-0.16-micron), Toshiba (SRAM 0.21-0.25-micron), Infineon (DRAM 0.14-micron, 0.11-micron, and 90nm), and Elpida (DRAM 0.10-micron and 90nm).


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