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Chip Makers Settle Trade Secrets Suit

The Recorder

In a case that pitted two San Francisco business litigators against each other, a China-based chip-making startup will pay Taiwan Semiconductor Manufacturing Co. Ltd. $175 million to settle a trade secrets theft suit. The settlement, announced Sunday, dismisses litigation that was pending between TSMC, the world’s largest chip fabricator, and Semiconductor Manufacturing International Corp. in San Francisco federal court, at the U.S. International Trade Commission and in Taiwan District Court. TSMC may refile its complaint if SMIC breaches the agreement or commits acts of misappropriation specified in the confidential agreement. 

TSMC filed suit against Shanghai-based SMIC in San Francisco in December 2003, claiming the company had misappropriated trade secrets and infringed several patents. A few months later SMIC raised $1.8 billion in an initial public offering. 

"While trade secrets were misused in processes abroad, the two companies looked to California in particular for their business," said TSMC's lead attorney, Jeff Chanin.