Let's get this straight right up front: I've had Taiwan Semiconductor Manufacturing
Part of Taiwan Semiconductor's secret is its manufacturing processes, which it has spent years perfecting. That makes sense, of course. Unlike Intel
That's why I'm so disappointed by the news that the company has settled a patent dispute with China's Semiconductor Manufacturing International
According to a Bloomberg report, a witness at one of Semiconductor Manufacturing's facilities said that more than 90% of its 180-nanometer process for creating chips was copied from Taiwan Semiconductor. Read that again. Yeah, I really did say 90%. (Nanometer refers to the space between transistors on a chip. A smaller space allows more chips to be made during production.)
Bear in mind that these are allegations, and the settlement may indicate that the allegations were, at best, inflated. Still, in the world of technology, patents provide key protections to innovators. And innovation drives profits when it comes to technology. The good news is that Taiwan Semiconductor gets cross-licensing rights in the deal, and that the settlement doesn't grant Semiconductor Manufacturing a license to its patented technology and processes. That's good, because it may mean more licensing revenue is in the chips for Taiwan Semiconductor. At least, it better be, because $175 million is nowhere near enough.
For related Foolishness:
- Taiwan Semiconductor was one of my three stocks for the Scrooge in you in December.
- But I also think it might be a hidden giant.
Many promising companies remain hidden because they're small. That's where Tom Gardner and his team of Foolish analysts focus their time, and they're walloping the market as a result. To get in on the action, take a trial of Motley Fool Hidden Gems. It's risk-free.
Fool contributor Tim Beyers has been a downer on Intel and the semiconductor industry in general. But there are plenty of experts who think he's nuts. You can find them at the Fool's Intel and Semiconductor Industry discussion boards here at Fool.com. Tim doesn't own stock in any of the companies mentioned in this article. To find what stocks he owns, check Tim's Fool profile, which is here. The Motley Fool has a disclosure policy.
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