By Stanley Myers, President and CEO, SEMI

Protection of intellectual property (IP) rights is an important area of concern for the semiconductor manufacturing industry. In a competitive global business environment, IP protection is essential to the survival of equipment and materials suppliers, enabling them to invest the significant R&D funds needed to sustain technological advancement of the semiconductor industry.

In recent years, suppliers have been increasingly funding a larger portion of the escalating R&D costs needed for the continued success of the semiconductor device industry. These challenging conditions pose a serious threat to the well-being of the entire electronics supply chain, where IP has always been the main engine for growth. Continued IP violations of various forms undermine the development of the next generation equipment and materials needed to remain on the Moore’s Law technology curve.

In response to calls from our members to support efforts in protection and enforcement of IP rights, SEMI recently commissioned a detailed study on the extent and impact of IP challenges facing the industry. A white paper, based on the survey findings, has been developed and will be published this month.

About 90 percent of respondents reported that they have experienced some form of IP violation; including infringement, counterfeiting, and theft of core technologies or products, spare parts and component, trade secrets, and trademarks. More than half of all companies characterized these infringements as serious.

While more than half of the companies surveyed have taken legal action against IP violations, approximately 56 percent were not satisfied with the outcome. Legal processes are slow, expensive, and unpredictable, the companies were concerned about the significant costs and variability in outcome of litigation.

More than 60 percent of the companies have experienced adverse economic impact caused by IP violations, mainly due to reduced sales and lost market share. In addition, IP violations lead to pricing pressures and reduced average selling prices, resulting in further revenue losses. In fact, total industry financial losses and damages amounts to billions of dollars per year, according to the survey estimates.

The companies identified China, Korea, North America and Taiwan as regions of the greatest concern. However, the form and nature of IP violations in each region varies and occur for different reasons. Surprisingly, more than 50 percent of the companies reported IP-related issues with their device-making customers, which was obviously seen as a sensitive issue that suppliers are reluctant to confront or discuss in detail.

Strong and effective intellectual property protection is critical for SEMI member companies in all regions and throughout the supply chain. For their part, countries and governments must recognize that they will greatly benefit from robust IP policies through the attraction of outside investment and the encouragement of innovation by domestic companies. It is also critical to educate device customers on the value of IP to the equipment and materials industry. Most chip makers heavily invest in IP themselves and understand the cost to create IP. They should in turn recognize the impact on their suppliers, and work with them to avoid IP violations.

To address these issues SEMI will focus on public policy and work with governments to foster global IP protection. We will also drive customer dialog and work with SEMI member companies to promote a global culture of respect for the industry’s IP assets as well as providing IP management education to our members.

For more information on IP-related resources from SEMI, including a downloadable version of the IP White Paper, please visit http://www.semi.org/ipwhitepaper.