In a statement released Monday, TSMC said it is seeking an injunction against Shanghai-based SMIC as well as an undisclosed amount in monetary damages. The lawsuit, which was filed in the US District Court of Northern California on Dec. 19, claims that SMIC persuaded engineers that it had hired away from TSMC to reveal trade secrets, which led to patent infringement.

The lawsuit also claims that SMIC contacted an engineer still working with TSMC and asked him to reveal confidential company information. We feel that we have no other choice than to proceed through the courts in order to protect our technology, said Dick Thurston, general counsel for TSMC.

The lawsuit could have far-reaching implications for SMIC. A similar lawsuit was filed in Dec. 2000 by United Microelectronics Corp. against Silicon Integrated Systems (SiS). It sought, and two years later won, an order requiring US Customs to seize SiS chips, and related system products using them, which applied the patented UMC process technology.

A TSMC spokesman said Monday that the company had not decided if it would seek a similar order as part of its injunction. But we won't rule anything out,?he said.

An SMIC spokesperson said her company had not yet seen the complaint. She added that SMIC always respects the IP of others.

The lawsuit is not entirely surprising. SMIC is still an underdog in the foundry industry -- it will make about $350 million in 2003 compared to TSMC's $5.8 billion -- but it is drawing the interest of companies such as Infineon, Elpida, Broadcom, Nvidia, Marvell and Texas Instruments, among others. Its location in China, and increasingly respectable yields, makes it a natural second source for many IDMs and fables firms.

SMIC has hired away hundreds of engineers from Taiwan-based semiconductor companies to accelerate the development of its foundry business, and it is aggressively looking for more engineers to support its expansion plans.

Many of SMIC's senior managers came from TSMC and its rival, foundry United Microelectronics Corp. In the past, these two companies themselves have levied allegations against each other as personnel have migrated between the two foundries.

From 1988 to 2001, TSMC registered 1683 patents with the US Patent and Trademark Office (USPTO), second only to UMC (1987 patents) for Taiwan companies registering patents in the US, according to the USPTO's Technology Assessment and Forecast Report.

During that period, Taiwan represented 1 percent (36,993) of technology patents granted in the US -- and 4 percent in just 2001. China, although it has been granted 1183 patents since 1988, still registered as 0 percent in the statistical breakdown.

By: DocMemory
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