MediaTek Inc (
MediaTek officials say Via copied its technology in controller chips that run the CD-ROMS found on nearly all personal computers. The company also filed suit against AOpen Inc, which is using the chipset inside its CD-ROM machines.
"MediaTek believes that our innovation is central to our success and we intend to protect our proprietary technology to the fullest extent of the law," said Yu Ming-to, spokesman for MediaTek.
"We cannot allow companies to take our technology and use it to enter this business. Legitimate competitors must make the investments and carry out the engineering work required to design these advanced products."
But in a case still pending in US courts, MediaTek competitor Oak Technologies, a US-based firm, sued MediaTek over the same product in April 1998, seeking to bar it from the US market.
The two firms make chips for identical markets, optical devices like CD-ROM, DVD-ROM, CD-recordable and rewritable machines.
MediaTek made a name for itself in the market last year, when profit margins shot over 50 percent and its stock skyrocketed from its listing price of NT$198 per share to over NT$700 per share. Its margins remain at or above 50 percent, the same level as US and Japanese companies in the same market.
Yesterday, the firm's shares closed down the market limit 7 percent at NT$432, while VIA slumped 4 percent to NT$72.5 per share.
Analysts said competition in chips for optical devices would only intensify and more lawsuits are certain.
"Mediatek only has one product line, it is not good for them to lose any market share," said Paul Wang, analyst at SG Securities in Taipei. As companies begin to use VIA-designed chips, MediaTek has had to lower prices.
US district courts are authorized to preside over international patent infringement cases and can bar products containing stolen intellectual property from entering the world's largest market as well as award monetary damages. MediaTek has asked that the case by tried before a jury in Southern California.
MediaTek's customers are Taiwanese makers of CD and DVD-ROM products, like Lite-On Technology Corp (源興科技), another firm analysts favored throughout the year. The two firms complemented one another with optical machines from Lite-On powered by MediaTek chips, which grabbed orders worldwide, according to Wang.
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