Taiwan Today

Giant chip maker Taiwan Semiconductor Manufacturing Co. Ltd. announced Nov. 10 it has settled a lawsuit filed against mainland China-based Semiconductor Manufacturing International Corp. According to the terms of the settlement, SMIC agrees to pay TSMC a fine of US$200 million in four installments over a four-year period. SMIC also agrees to hand over 10 percent of its stock to TSMC in two installments. Also in accordance with the settlement, SMIC agrees to withdraw its counter suits against TSMC filed in U.S. and mainland Chinese courts. The two parties also agree to dissolve their earlier cross-licensing agreement. Whether the settlement will clear with authorities in Taiwan is not entirely clear, however. The Investment Commission under the Ministry of Economic Affairs indicated Nov. 10 that it disapproves the proposed stock transfer. In response, TSMC said it agreed to receive SMIC stocks only to keep the value of its trade secrets, and does not rule out the possibility of selling its stocks. TSMC filed its lawsuit against SMIC in August 2006. The Taiwan chip maker accused its mainland counterpart of misappropriating trade secrets and violating the terms of a settlement agreement reached between the two parties in January 2005. On the same day the lawsuit was settled, SMIC founder Richard Chang resigned from his position as the company’s chief executive officer. Sources said that Chang’s resignation is related not only to the lawsuit, but also to the fact that SMIC has lost US$800 million over a seven-year period. David N.K. Wang, former president of Applied Materials Asia, will now take over the reins of SMIC. The fact that Wang has been on good terms with TSMC should make it easier for the two companies to cooperate in the future, sources said. (TYH-HZW)