TSMC lawsuit alleges SMIC stole chip-making secrets

TAIPEI, Taiwan – Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), the world’s largest contract chip maker, has filed a lawsuit that alleges one of China’s top chip makers infringed on its patents and misappropriated trade secrets, according to a statement released Monday.

The suit alleges Semiconductor Manufacturing International Corp. (SMIC), a Cayman Islands-registered company headquartered in Shanghai, has infringed multiple TSMC patents and misappropriated trade secrets and asks for a permanent injunction against SMIC as well as unspecified monetary damages, it said.

The charges were leveled against SMIC in a suit filed by TSMC, TSMC North America, and TSMC subsidiary Wafertech LLC in the U.S. District Court of Northern California on Friday.

The suit claims SMIC has hired more than 100 former TSMC employees and has asked some of them to provide SMIC with TSMC trade secrets. In addition, it alleges that SMIC asked a TSMC manager to obtain information related to TSMC’s chip-making process technology and pass it along to SMIC. The TSMC manager referred to in the suit is no longer employed by the Hsinchu, Taiwan, company.

“SMIC currently has not received any official notice from any court in any jurisdiction filed by TSMC, so we have no comment on this matter at the present time,” said Sarina Huang, a SMIC spokeswoman, via e-mail. “We want to emphasize that we always respect intellectual property rights of any third party.”

In 2002, TSMC accused the former TSMC manager of sending confidential documents, including equipment layout plans for a chip fabrication plant, via e-mail to SMIC while still an employee at TSMC, said J.H. Tzeng, a spokesman for the company. That case is pending and an arrest warrant has been issued in Taiwan for the former employee, who did not appear in court to answer the charges, he said.

Huang confirmed that the former TSMC employee did work for SMIC after leaving TSMC, but said the individual left SMIC when charges were filed in Taiwan.

“We all believe (the former TSMC employee) is not guilty,” Huang said, adding that SMIC was not aware of the former employee’s current whereabouts.