TSMC says its staff were induced to steal trade secrets, a claim SMIC dismisses as a smear campaign Taiwan Semiconductor Manufacturing Co (TSMC) has raised the stakes in its lawsuit against Semiconductor Manufacturing International Corp (SMIC), making fresh accusations which drew an angry response from its mainland rival. In new filings to the United States District Court of Northern California this week, TSMC accused SMIC of luring TSMC employees with hefty stock awards and options, and inducing them to steal company trade secrets. The company filed the court documents in response to a February 17 motion to dismiss, filed by SMIC. The mainland chipmaker argued the US court had no jurisdiction over the trade secret dispute. According to the Taiwanese chipmaker, SMIC lured 'key technical and sales employees with substantial offers of stock, solicited them to steal and disclose TSMC's process and other proprietary information, and then used that information to unfairly compete [with TSMC]'. One TSMC manager alleged SMIC offered TSMC employees 50,000 shares and 50,000 options, while senior employees could receive 80,000 shares and 80,000 options. New recruits were expected to bring SMIC 'presents' consisting of TSMC's technical information. SMIC yesterday described the filings as a 'courtroom smear campaign' and said it would prepare a response by April 9. 'SMIC is confident of its defences and will vigorously defend itself it court,' it said. TSMC's filings contained several affidavits from former SMIC employees, one of whom said it 'was no secret that TSMC process information was being used' at SMIC's plants in Shanghai. One witness, identified only as Doe 1, estimated that 90 per cent of SMIC's 0.18-micron logic process flow was copied from TSMC. 'I and other SMIC employees openly made use of TSMC information, and we were never told not to do so by our managers,' the witness said, adding that TSMC information had been stored on central computers at SMIC so everyone could access it. Willy Luo, who worked at SMIC between July 2002 to September last year, said SMIC had a codename for TSMC process technology called 'BKM1', or 'best known method one'. 'I was told by my section manager that SMIC employees could refer to BKM1 in written documents, but that BKM1 should not be identified by name as TSMC's recipe,' Mr Luo said. The former SMIC employees said they had seen documents and photographs of chips which contained the TSMC logo, and other documents which appeared to be TSMC papers with the logo removed. TSMC also said a technical analysis indicated SMIC had used the Taiwanese company's 0.18micron technology to make chips for Broadcom. 'The amazing similarities between TSMC's and SMIC's chips are not known by TSMC to be present in other competitors' chips,' TSMC said. It noted that Singapore's Chartered Semiconductor was SMIC's only licensor of 0.18-micron technology, but the Broadcom chips bore 'little similarity to comparable features in a chip made by Chartered'.