China's move to design creates IP worries

Laurie Sullivan, EBN
(09/16/2003 8:00 AM EST)       

At the Taiwan and China Semiconductor Industry Outlook 2003 conference yesterday in San Jose, industry executives and government officials made it clear that concerns centered on protecting intellectual property remain top of mind.

During the keynote address, Morris Chang, chairman and chief executive at Taiwan Semiconductor Manufacturing Co. Ltd., discussed several market trends, including one positioning China as an important manufacturing hub and design center.

But China's push toward design work, combined with a lack of understanding for private property laws, has many concerned.

"Western companies better watch their IP," Chang suggested, when asked about his thoughts on protecting intellectual property for United States-based companies operating in China.

The challenge with China is to strike a balance between the need to successfully compete in a commercial market and protect national security, according to Lisa Bronson, deputy secretary for Technology Security Policy & Counterproliferation for the United States Department of Defense, Washington D.C.

While the Department of Defense is not concerned about the majority of general-purpose microprocessors, it is concerned with losing design and fabrication data.

"China has been a source for missile, nuclear and chemical weapons proliferation to unstable countries as well as countries that support terrorism," Bronson said.

The DOD relies on several commercially available chips with unique architectures to build advanced weaponry. Since some are key to tactical onboard sensor systems, the DOD does not want a potential strategic competitor with a record of proliferating an enabling technology to learn how to design cutting-edge microprocessors.

Bronson said there is no indication the Chinese government is warming up to the idea of protecting IP rights.

"There are no laws, no respect for IP," Bronson told EBN. "The protection of private property is a Western thought process, and not part of the Chinese culture at this time."