IN A COURT BATTLE between chipmakers TSMC has won a major victory over China's biggest chipmaker SMIC, in a case that could kill off the outfit.
A US jury decided that SMIC nicked trade secrets, infringed patents and breached contracts over a prior settlement between the two companies.
The mainland Chinese outfit will now face a heavy damages claim, but since it only has $500 million in the bank and $1.1 billion in debts it could end up in bankruptcy and having to sell itself off.
Most analysts expect the chipmaker to be fined a cool billion and suffer an injunction preventing its patent infringing chips from entering the US.
Any injunction will kill off more than half of SMIC's business. While it is winning new customers fastest in Greater China, that is not enough to cope with the lost trade or pay the fine.
What could save the outfit is if the Chinese government decides to ignore the fine and not enforce it.
SMIC's billion-dollar factories are all in China and the company is viewed as a key part of China's plan to become a chip manufacturing powerhouse in the future. µ
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