TSMC, SMIC Back in Court

Staff Reporter -- Electronic News, 8/28/2006

It's back to the courtroom again for China-based foundry Semiconductor Manufacturing International Corp. and its rival Taiwan Semiconductor Manufacturing International Corp. (TSMC).

TSMC has filed a filed a patent and trade secret lawsuit against SMIC, in respect of an alleged breach of the settlement agreement entered into between the SMIC and TSMC in January 2005.

In the 2005 settlement, SMIC agreed to pay TSMC $175 million in installments over six years. Additionally, the two parties agreed to cross license to each other's patent portfolio through December 2010. The settlement agreement also provided for the dismissal of all pending legal actions without prejudice between the two companies in U.S. District Court, California State Superior Court, the U.S. International Trade Commission and the Taiwan District Court.

In the most recent suit, TSMC is seeking compensation due to an alleged breach of the 2005 agreement and prevention of SMIC's use of TSMC's patents and trade secrets. Further details of compensation and the alleged breaches have not been disclosed.

In a statement, SMIC said it is "very shocked by and deeply disappointed with the actions of TSMC and believes their actions are brought in bad faith."

SMIC added that it will fight the lawsuit.