Taiwan government loses suit against SMIC exec

March 19, 2007 – The Taipei High Administrative Court has ruled in favor of Richard Chang, CEO of top Chinese chipmaker Semiconductor Manufacturing International Co. (SMIC), who was fined NT$5 million ($US151,000) by the Ministry of Economic Affairs Investment Commission (MOEAIC) for allegedly violating bans on mainland-bound chipmaking investments, as reported in the Taiwan Economic News (CENS).

The paper reports that according to the ministry’s officials, all Taiwanese mainland-bound investments must be approved by the ministry and Chang still held ROC nationality when he invested in SMIC.

The court has reportedly ruled that the ministry must remove all of its punishment measures and decision to make appeals against Chang and his property in Taiwan. The ruling states that the ministry has no ground to judge that Chang personally invests in SMIC or he invests in the mainland Chinese chipmaker without government permission by simply identifying he holds a 1% stake in SMIC Cayman, which holds 100% ownership of SMIC.

CENS also states that Chang claims to hold approximately 0.5% ownership of SMIC Cayman, although he is an initiator of the company and resigned as chairman of the holding company in 2005. Chang has stated that he does not own any SMIC share and the ministry mistakes SMIC Cayman’s corporate investment behavior for his personal investment behavior.

An MOEAIC minister was cited by the paper as saying the ministry will appeal the decision.

As reported last fall, SMIC added another page to its corporate legal battles with Taiwan Semiconductor Manufacturing Co. (TSMC), which have been ongoing since 2003. Charges of breach of settlement, infringement upon competition, and theft of trade secrets and intellectual property have marked the latest interactions between the foundries.


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