TSMC, SMIC Decide to Play Nice

Online Staff -- Electronic News, 1/31/2005

Hsinchu, Taiwan-based Taiwan Semiconductor Manufacturing Company (TSMC) and Semiconductor Manufacturing International Corp. (SMIC) said yesterday they have reached a settlement agreement in the pending patent and trade secret litigation.

The two foundries have been involved in legal disputes here and in Taiwan for some time, with TSMC alleging that SMIC purloined its intellectual property.

Under terms of the settlement, SMIC is to pay TSMC $175 million over 6 years and the companies have agreed to cross license to each other’s patent portfolio through December 2010. The agreement also dismisses all pending legal actions between the companies in the U.S. District Court, the California State Superior Court, the U.S. International Trade Commission, and the Taiwan District Court.

Furthermore, TSMC said it would refrain from filing suit against SMIC for alleged acts of trade secret misappropriation, although the settlement does not grant a license to use any of TSMC’s trade secrets.

“With this settlement, we have amicably resolved all of our pending litigation with SMIC and believe that it is in the best interest of our shareholders,” F.C. Tseng, deputy CEO at TSMC, said in a statement.