Chipmakers 'ripping off' equipment suppliers

More than half of the companies that make semiconductor production equipment and process materials have claimed their own customers have ripped off their intellectual property (IP), according to claims by SEMI, the organisation that represents fab-kit makers.

In a white paper released to highlight the problems that production equipment companies, SEMI said 90 per cent of companies surveyed for the report said they have experienced some form of IP violation, including infringement, counterfeiting and copying of technologies. The companies identified Taiwan, China, Korea and North America the leading semiconductor production territories as the “regions of greatest concern”. Japan and Europe trailed far behind in terms of concern.

Individual cases included the situation where a customer encouraged the competitor of a fab-tool maker to copy a product. SEMI estimated that the industry loses up to $4bn annually through IP infringement and counterfeiting.

SEMI said its surveyed covered companies with more than half of the total annual sales of production equipment: many were initially reluctant to take part, the organisation claimed. Almost two-thirds of the companies said they had taken legal action against IP violators but just under half said they were satisfied with the outcome. SEMI said the net result of the IP violations is a reduction in the price of fab tools.

The nature of IP problems for production-equipment makers differed strongly between the Far East and North America. In North America, companies said the biggest problems were disputes over the validity of IP, trade secret theft and unintentional infringements. Startups complained that companies with deeper pockets felt able to challenge their patents and tie them up on long-lasting lawsuits.

SEMI claimed its members felt reluctant to take legal action in many cases. “Since the prevailing rule in the industry is that the supplier will not take legal action against its customers, suppliers feel helpless,” the report claimed, adding: “Device makers may wonder why the suppliers and SEMI have not come forward before, and are only now working on IP rights protection. The primary reason is that costs are rising and undermining investments into R&D and IP development. In addition, over the past two decades chip suppliers have pushed an increasing share and burden of R&D investments to their suppliers and now demand full turnkey solutions.”

Link: SEMI white paper

Image: Equipment suppliers claim they are losing billions through IP infringement

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