TSMC, the No.1 contract chip manufacturer in the world, shot down allegations that it is illegally using chip production technology patented by Globalfoundries, calling the accusations "baseless" and vowing to "fight vigorously" protect itself. Globalfoundries, the No.3 player in the contract chipmaking market, launched a series of lawsuits against TSMC and its customers, arguing that TSMC is violating 16 patents covering how chips are produced.
TSMC said Tuesday that it has started sorting through the lawsuits filed with the U.S. International Trade Commission, U.S. District Courts in Delaware and Texas and the Regional Courts of Dusseldorf and Mannheim in Germany, and believes the allegations are "baseless." Globalfoundries said TSMC's most advanced chip production technology, 7-nanometers, in addition to its older 10-, 12-, 16- and 28-nanometer nodes are running afoul of the patents in question.
Globalfoundries, which said the legal assault is necessary to protect its U.S. investments, is looking to ban the import of products containing chips running afoul of its 16 patents into the United States and parts of Europe. The lawsuits notably name TSMC customers Broadcom, Qualcomm, Mediatek, Xilinx and Apple; device manufacturers including Cisco Systems, Arista Networks, Lenovo, Motorola and Google; and electronics distributors Mouser, Digi-Key and Avnet.
Banning TSMC chips could have severe consequences for the global electronics industry, which has been struggling to stay out of the escalating trade battle between Washington and Beijing. Trade tensions are centered on China's allegedly unfair intellectual property practices, including forced technology transfers. The threat of additional tariffs and supply restrictions to customers in China have been hanging uncertainly over the U.S. chip industry in recent months.
Globalfoundries is also looking for "significant" damages from TSMC, which it said has made more than $10 billion from selling chips based on the allegedly stolen patents. TSMC said that it had amassed more than 37,000 patents and has been aggressively adding to its portfolio in recent years. Some of the 16 patents asserted by Globalfoundries came from its acquisition of IBM Microelectronics in 2015. Globalfoundries added more than 16,000 patents from IBM.
"TSMC invests billions of dollars each year to independently develop its world-class, leading-edge semiconductor manufacturing," the company said in a statement. "We are disappointed to see a foundry peer resort to meritless lawsuits instead of competing in the marketplace with technology." TSMC, which holds half of the $60 billion contract chipmaking business, added that it "will fight vigorously, using any and all options, to protect our proprietary technologies."