Top semiconductor maker TSMC draws EU, US antitrust scrutiny

Semiconductor

5 September 2017. By Natalie McNelis.

The world's biggest semiconductor maker is facing scrutiny by US and EU antitrust watchdogs after allegations that it abused its market power to illegally exclude competitors from the semiconductor market, MLex has learned.

Taiwan Semiconductor Manufacturing Company has been accused of imposing abusive contractual terms for the supply of semiconductors, it is understood. The European Commission and the Federal Trade Commission have contacted semiconductor customers to explore the allegations.

A spokesperson for the European Commission said officials were monitoring companies in the semiconductor industry.

"Generally, the commission monitors possible anticompetitive market practices and abusive conduct," the spokesperson said. "This includes behavior by operators active in the semiconductor sector."

Asked to comment on the investigation, a spokesperson for TSMC said the company "respects and obeys the law."

"The semiconductor industry is a highly dynamic and competitive industry, which means TSMC is constantly having to work hard, to make investments in R&D and capacity, and to deliver high quality and innovative services to our customers," the spokesperson said.

TSMC, headquartered in Hsinchu, Taiwan, is by far the largest producer of semiconductors in the world, with net revenue in 2016 of $31.3 billion.

Its closest competitor is California-based GlobalFoundries, a privately held company with estimated 2016 revenue of $5.5 billion, according to sector researcher IC Insights. A spokesperson for GlobalFoundries stressed the company was founded to inject competition into the semiconductor market, adding it "would support any action by regulators to ensure a fair and open competitive environment."

The world's third-biggest semiconductor maker, United Microelectronics Corporation, is based in the same Taiwanese city as TSMC. It also has production sites in China and Singapore.

GlobalFoundries was created through the 2009 divestiture of the manufacturing arm of AMD, which complained about abusive sales practices by US chipmaker Intel.

That complaint prompted an EU antitrust probe that led to a 1.06 billion euro ($126 billion today) fine against Intel in 2009 for abuse of a dominant position.

Europe's highest court will rule on Intel's appeal against the decision tomorrow.

* Additional reporting by Leah Nylen, Lewis Crofts, Matthew Newman and Xu Yuan.

	Eliot Gao