TSMC ‘misused’ UniRAM trade secrets

A US court ruled that Taiwan Semiconductor, the world’s largest manufacturer of made-to-order chips, misused trade secrets of UniRAM Technology, one of its former customers.

The United States District Court for the Northern District of California, San Francisco Division, awarded UniRAM US$30.5m in litigation, TSMC said yesterday.

The verdict marks the first time TSMC is accused of having violated intellectual property rights of a client. Such accusations are potentially damaging for TSMC because its foundry business model requires its customers to reveal large amounts of their proprietary technology to their manufacturing partner. Customers need to trust that their secrets are safe with TSMC and will not be leaked to competitors.

But analysts said the impact of the UniRAM ruling was likely to be limited. Cheng Ming-kai, head of Asian Technology Research at CLSA, said such a ruling “could only do some serious damage if it related to a credible source, a sizable customer.”

UniRAM was founded by a Taiwanese entrepreneur in Mountain View, California, in 1998.

UniRAM had sued TSMC alleging that some of its proprietary technology on embedded D-Ram, a type of memory chip, had found its way to Monolithic System Technology, a competitor of UniRAM that also used TSMC’s foundry services.

TSMC criticised the ruling as erroneous. It said it had the right to file post-trial motions and to appeal the verdict. “TSMC has always held itself to the highest standards of respect for intellectual property, and believes that this verdict is in error,” said Dick Thurston, vice-president and General Counsel. “We intend to pursue all defences vigorously.”

The verdict comes as TSMC is embroiled in a series of legal disputes with Smic, China’s leading contract chipmaker, in which the Taiwanese company claims that its Chinese rival is using trade secrets owned by TSMC.

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