Frbiz.com reports the significance of TSMC and SMIC disputes

To what extent can lose in a patent case is much more miserable? 200 million U.S. dollars compensation, 10% of the company's equity, together with Richard Chang, founder of the departure. In the patent dispute frequent technology industry, because of a lawsuit against a business caused such serious consequences, probably never again can not find a second.

SMIC and TSMC's this about a patent dispute has been going on seven years, can be described as time-consuming. One is the world's oldest, a third market, but also because it involves the sensitive high-end semiconductor manufacturing technology, you come to me to mention eye-catching nature.

For this result, many people will meaningfully say that it appears SMIC is really an infringement. Also media analysis, because less than the cash so had to cede shares to TSMC, SMIC, and even Richard Chang I have paid a heavy price, speech is full of regret between the feelings.

However, careful reading of this result, it seems but also figured out a little bit different taste. In fact, if the process of combining a few details of the lawsuit, it will generate more questions. For example in 2005 the two sides already reached a settlement, and according to the agreement at that time SMIC has already paid a lot of money, why TSMC and "defection"? Litigation dragged on until 2067 Why is the decision today? In terms of scale, technology or profitability point of view, are far from SMIC TSMC's rival, TSMC SMIC why the bite and hold?

By Chang and Chang's personal grudges to explain these issues in the lack of convincing, but the combination of the two companies in which internal and external environmental analysis, but they can come to different conclusions.

In fact, since the economic crisis, because the decline in sales of electronic products, as a core component of the upper reaches of the semiconductor industry has been hit hard. Such changes in the economic environment caused by the semiconductor industry, the biggest impact is intensified industrial division, enterprises increasingly rely on economies of scale. This effect in the two companies in which capital, technology and talent-intensive foundry industry, particularly apparent. Only one year, chip giant AMD spin-off manufacturing plants at top speed, and with the fourth-largest chip foundry Chartered companies combined to form the Global Foundry, encroaching upon the value of the scale of TSMC. Memory chip giant Samsung has been cut into the foundry area of the foundry market, like a tiger.

In this case, SMIC is the third opened the gap is being increasingly marginalized. But even so, to enter in 2009, through several quarters of earnings, SMIC can still find some of the highlights of the international operations. First, the completion of Beijing, Shanghai, Wuhan, Guangzhou, diamond-shaped layout, with a wide range of product line assets; Secondly, the mainland clients are increasing each quarter, accounting for the proportion of SMIC revenues are gradually increasing; third, has been SMIC shares drag the huge amount of depreciation accrual is completed next year, which means a loss of up to 9 years SMIC could start next year, profits.

TSMC contrast, within the year, apart from the face of decline in performance, process bottlenecks encountered in the limit of Moore's Law, TSMC also because of layoffs ever experienced a major personnel upheaval, the complex operating environment. The most critical is that, since 2003 investment in Shanghai's Songjiang has been an 8-inch production lines, TSMC has had no home in the Mainland invest an additional 1 min. This is UMC and ship through the active layout of the mainland, Intel in China building 12-inch production lines warm contrast.

This issue, there are difficulties untold TSMC. As a benchmark for high-tech enterprises in Taiwan, and representatives of TSMC's chip manufacturing technology has been protected, which makes TSMC investment in the mainland is strictly limited, TSMC can not be a smooth transfer to the mainland chip production line.

Since mainland China from a strategic point of view of competition in the future can not be missing in the territory, in reality, are unable to successfully invest in, then the "curve into the" That may well be a second-best option. The acquisition of mainland China's largest semiconductor foundry local Another advantage is that at the same time get rid of a mortal malady.

Therefore, TSMC through to win the patent case and then entered the SMIC, there is no evidence can not be said to be a conspiracy, but the underlying business logic is well thought out.

The current situation, TSMC shown considerable restraint and convergence. In the settlement agreement stated that in 10% of the holdings are "limited", it should not enter the board, it will not interfere with daily operations of SMIC. But in the long run, because in the foundry area of direct competition, if well-run SMIC, TSMC will be faced with "right-hand each other go" problem. Therefore, SMIC and the whole Chinese semiconductor industry, TSMC's White have become a non-Sato variables.

First, SMIC development. Settlement agreement was reached prior to the board within the SMIC has a view that the future SMIC has two paths: one is to always maintain the largest and the world's third-place efforts to develop local customers break through, and the other one is other companies to form strategic alliances, "two-pass road could go."

In Chang's departure, the outside world once thought was gone an increased risk of road. Shanghai is being reconsidered because of the development path of the semiconductor industry and has prompted two other semiconductor chip factory Hua Hong NEC, and Grace Semiconductor to merge. Municipal government also considered the inclusion of both the SMIC map, sources alleged that Chang is the biggest obstacle to the merger.

However, due to differences between the three shareholders of the company background of large, complex ownership structure, which combined their own operational difficulties enormous, it is not easy to conduct. So perhaps you can make a bold guess: In the White SMIC TSMC, the future SMIC dominant power, there is likely to expand.

Is closely related to another issue with this is that Chang's departure declared the end of an era, China's semiconductor industry go from here?

In fact, the moment no matter who led China's future semiconductor industry, will face a greater challenge, the challenge comes from industry itself. The first is the industry maturing, which means that the industry's growth will gradually stabilized, for those left behind, the probability of success in the reduction. Secondly, in the entire chip industry chain link, chip manufacturing is the largest investment in the proceeds with the lowest part of a big get bigger. This case, the whole industry in a positive adjustment, whether it is the most powerful equipment supplier TSMC is the largest, are looking beyond the semiconductor industry, a new way out.

Therefore, whether SMIC itself, or the Chinese semiconductor industry, we need to have a brand new idea and a complete development strategy. Now might be a good time to adjust.