Posted by: Bruce Einhorn on September 11, 2009
There’s no shortage of lawsuits in the chip industry, where it’s pretty common for semiconductor manufacturers or designers to accuse rivals of intellectual-property theft. Most of the time these cases get settled before going to trial, which is one reason the court battle now underway between Taiwan Semiconductor Manufacturing Co. (TSMC) and its Shanghai-based rival, Semiconductor Manufacturing International Corp. (SMIC), is so interesting. The two companies reached a $175 million deal in 2005 to settle a claim by TSMC, the world’s biggest foundry, that its smaller Chinese rival had stolen some of its secrets. But the Taiwanese company now alleges SMIC reneged on the deal, and oral arguments began yesterday in Oakland.
As reported by Semiconductor International, TSMC’s lawyer argued that “SMIC allegedly changed the name of computer files that included TSMC property, engaged in document destruction, and thereby violated the 2005 settlement.” Contending that TSMC had not behaved in good faith, SMIC’s attorney “argued that TSMC launched the current lawsuit as a means of damaging SMIC’s ability to compete with TSMC, which allegedly feared SMIC’s fast rise into the top tier of foundries.”
The timing of the trail couldn’t be better, coming the same week Abu Dhabi’s sovereign wealth fund announced its bid to buy Chartered Semiconductor, the Singapore foundry that is a distant No. 3 behind TSMC and Taiwanese rival United Microelectronics Corp. Abu Dhabi’s plan is to combine Chartered with GlobalFoundries, the joint venture it formed earlier this year with AMD. Taking control of Chartered would give GlobalFoundries, which already has a fab in Europe and another in upstate New York, with the Asian presence it needs. One piece of the pie still missing, though, is China. Chartered doesn’t have any fab there, but TSMC does and UMC is planning on buying one.
Might GlobalFoundries now be eyeing SMIC as a way of filling that hole? Ed Sperling, blogging at Chipdesignmag.com, says we should expect more such deals, although he doesn’t mention SMIC or any other potential targets. “You have to wonder just how many facets and how deep the plan by the Abu Dhabi government actually runs. Our guess is this is just phase one.” An SMIC deal might make sense: Like Chartered, the company struggles to stay out of the red now but it does have some impressive fabs in China and, as part of a larger company with the scale to compete against TSMC and UMC, it might be a good business.
Presumably any deal for SMIC wouldn’t come till after the TSMC trial is over, though. If so, then we shouldn’t expect any developments for a while: David Lammers, reporting on the trial at Semiconductor International, says it could last 50 to 60 days.