China's SMIC in settlement talks with TSMC - sources

TAIPEI, Nov 6 (Reuters) - Top Chinese semiconductor foundry SMIC is in talks to settle a U.S. court case that found it guilty of stealing trade secrets from Taiwan's TSMC, the world's biggest contract chipmaker, a source close to SMIC said. The California jury ruling on Tuesday could put SMIC on the hook for more than $1 billion in damages to Taiwan Semiconductor Manufacturing Co, a lawyer for TSMC said. "This is impossible," the source told Reuters, referring to the compensation amount suggested by the TSMC lawyer. SMIC, which has a market capitalisation of HK$8.5 billion ($1.10 billion), should have a result next week on the compensation amount from its negotiations with TSMC, the source said late on Thursday, speaking on condition of anonymity because of the situation's sensitivity. The jury is expected to consider damages next week, the TSMC lawyer said. Trading in shares of SMIC has been suspended since Wednesday pending a price-sensitive statement. Another source close to SMIC said the company aimed to reach a settlement by early next week, and hoped for a resumption of trading in its shares by next Wednesday. The second source added that SMIC was trying to keep the final settlement amount in a similar range to another case several years ago between the two companies. In that case, unrelated to the current one, SMIC paid TSMC $175 million to settle claims of intellectual property theft. TSMC said it would make a statement after the trial was completed and investors should not use the compensation reported by media as reference. TSMC accused SMIC of hiring away about 180 TSMC employees to staff SMIC's Shanghai operations in 2000, and of telling new hires to bring documents showing how to set up a foundry, make chips and other design rules from TSMC. SMIC competes with TSMC, UMC and Chartered Semiconductor. ($1=HK$7.749) (Reporting by Jennifer Yang; Editing by Chris Lewis) (([e-mail]; [phone]; Reuters Messaging: [e-mail])) Keywords: SMIC/ (If you have a query or comment on this story, send an email to [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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