Taiwan chip foundry alleges corporate espionage (China)

NorthCountyTimes ^

[maui_hawaii]

SAN JOSE -- The world's largest contract chip maker claims a China-based rival stole its trade secrets by hiring away employees and urging them to bring "presents" of proprietary information when coming to work at their new jobs, according to court documents.

Taiwan Semiconductor Manufacturing Co., which handles chip-making for firms that don't have their own factories, claims Semiconductor Manufacturing International Corp. engaged in an "ongoing scheme of industrial espionage and unfair competition."

The lawsuit, originally filed in San Francisco federal court in December, alleges SMIC improperly obtained trade secrets and infringed U.S. patents. On Monday, it disclosed new evidence in response to SMIC's efforts to have the lawsuit dismissed.

Taiwan-based TSMC claims as much as 90 percent of one of its process flows -- the sequence of steps to fabricate chips -- had been copied by SMIC. This week's filing also said SMIC's use of stolen secrets was verified through a forensic examination of its chips.

The legal documents also cite witnesses who claimed SMIC referred to TSMC and its technology as "BKM1," for "Best Known Method 1." Another statement claims SMIC engineers openly discussed the use of TSMC technologies.

"As a public company, we have an obligation to protect our patents and trade secrets to maintain shareholder value," said Chuck Byers, director of brand management at TSMC.

SMIC, which was incorporated in the Cayman Islands but headquartered in Shanghai, was founded in 2000 and has quickly grown to have one of China's most advanced semiconductor factories.

Catherine Zhao, a China-based SMIC spokeswoman, was not available to answer questions after hours. Previously, the company called the claims meritless.

"We want to emphasize that SMIC has strict company policy about intellectual property protection and always respects intellectual property rights of any third party," SMIC said in a statement released after the initial lawsuit was filed Dec. 18.

SMIC isn't the first high-tech company in China to face claims that it stole trade secrets from established rivals.

In January 2003, networking giant Cisco Systems Inc. filed a patent and copyright infringement lawsuit against Huawei Technologies Co., claiming the Chinese firm copied Cisco's proprietary technology.

That case, however, was halted in October as the companies appeared to be nearing a settlement. A Cisco spokeswoman did not immediately return calls seeking an update Tuesday on the settlement talks.

Shares of TSMC closed at $9.90, up 60 cents, in Tuesday trading on the New York Stock Exchange. Shares of SMIC jumped $1.01 to close at $14.60 on the NYSE.

[sixmil]

We want to emphasize that SMIC has strict company policy about intellectual property protection and always respects intellectual property rights of any third party

LOL

[endthematrix]

"SMIC, which was incorporated in the Cayman Islands but headquartered in Shanghai, was founded in 2000 and has quickly grown to have one of China's most advanced semiconductor factories."

Commies understands modern business practices better than some on Wall Street. Will Neil Bush lose his shirt? Doubt it. Watch the US chip makers sail to Asia too. Ever looked "under the hood" of an F-22? Wait until chips for most of the defense products built for our future enemies are made by them.