IQE files against Tower Semiconductor claiming theft of trade secrets

Wafer company says it has 'significant reason' to believe Israeli chipmaker misappropriated IP

Updated IQE, producer of compound semiconductor wafers, has filed a lawsuit against Israeli chipmaker Tower Semiconductor, claiming the company misappropriated its intellectual property. Tower is in the process of being acquired by chip giant Intel.

The case, filed at the US District Court in the Central District of California Southern Division, asserts that Tower misappropriated IQE's intellectual property to unlawfully obtain patents on IQE's technology. IQE, which is headquartered in Cardiff in the UK, says it has "significant evidence" that Tower misappropriated its trade secrets.

According to IQE, the claims center on its porous silicon technology, intended for the manufacture of devices that could be used in 5G telecoms and advanced sensing applications, which the company is currently bringing to market.

An IQE spokesperson told The Register that Tower has been granted its own patents on porous silicon that IQE alleges are based on its technology.

Tower Semiconductor is in the middle of being acquired by Intel as part of a move by the chip giant to expand and diversify its chip manufacturing business.

Porous silicon, as its name suggests, is a "sponge-like" form of the semiconductor that appears to have some different properties to the solid material, which has seen it used for the fabrication of gas sensors, humidity sensors, biosensors, light emitting structures, and other applications.

IQE's spokesperson told us that one of the major applications was expected to be power-switching devices inside 5G handsets, a market currently supplied largely by France-based semiconductor maker Soitec.

Financial analyst Damindu Jayaweera at investment bank Peel Hunt said in a note to investors the "significant evidence" to back up IQE's claim includes breach of contract.

"We believe this relates to RF switching related Porous Silicon tech," he wrote, adding: "The technology in question could de-throne Soitec's RF-SOI dominance (worth c.$0.5bn annually)."

In a statement, IQE's Secretary and General Counsel, Tom Dale, said the company had brought its claims to court as it had "significant reason" to believe that Tower has misappropriated IQE's proprietary trade secrets for its own benefit.

"Our technology, processes and intellectual property are vital in underpinning IQE's products and solutions and in maintaining our market-leading position in advanced semiconductor materials. We will vigorously protect them and will provide further updates as material developments occur," he said.

We asked Tower Semiconductor for its side of the story in this legal action, and will update this article if we receive a response.

The $5.4 billion Intel acqusition was announced in February, and the transaction is expected to take about a year to complete. Intel said the purchase would expand its global capacity and speed up the company's path to becoming a major provider of foundry services. ®

Updated at 07.23 UTC on 19 July 2022 to add:

Following publication of this article a spokesperson at Tower Semiconductor sent us a statement:

"Tower strongly rejects IQE's baseless claims. Tower did not misappropriate any trade secrets and is the rightful owner of all of its patents. Tower is disputing these claims in court to protect its rights and intellectual property. Additionally, although Tower has every right to do so, Tower does not use porous Silicon technology for any of its customers or in any of its production flows."