The Battle for Intellectual Property in the Semiconductor Business

By Cybil Chou

Few people fully understand the technology behind products that shape our daily lives, from new PC operating systems to digital entertainment like music players and multifunctional phones. So many of the modern comforts and conveniences taken for granted rely on tiny semiconductor chips, ranging in size from 4 cm² to less than 0.04 cm². Yet as small as they are, disputes over infringement of any aspect of the design or manufacturing process of these integrated circuits (ICs) can cost millions of US dollars in settlements and legal fees.

The Chinese government has endorsed the development of the domestic semiconductor industry as a major economic focus in its 11th five-year plan, effective from 2006 to 2010. China may even surpass the US, Japan, Korea and Taiwan to become the world's largest chip consumer as well as manufacturer. According to forecasts by the US-based Semiconductor Industry Association, Asia will continue to be the fastest-growing chip consumption market, accounting for 48.2% of global consumption in 2009, with the vast majority of consumption in China. But the lack of intellectual property (IP) assets owned by domestic semiconductor firms, as indicated by the China Semiconductor Industry Association, means that China owns merely 3% of the world's semiconductor-related patents.