In order to compete in the highly competitive global chip market, Taiwanese companies are pooling their intellectual property to avoid duplication

Twelve Taiwanese firms are pooling their silicon know-how in a bid to boost the country's chip competitiveness in a cut-throat global market.

The group, tentatively named the Silicon Intellectual Property (SIP) Qualification Alliance, is made up of Taiwan's largest semiconductor players, including United Microelectronics and Taiwan Semiconductor.

The project is supported by Taiwan's Industrial Technology Research Institute's System-on-Chip Development Centre.

Chen Wen Feng, a manager with the institute, told CNETAsia the scheme will prevent labs covering the same ground that other labs in Taiwan are doing.

Only useful, market-driven information will be shared -- there is no need to share everything, said Chen. For now, research costs will be borne by individual members of the alliance, but he did not rule out some sort of cost-sharing in future.

He said rules were still being worked out to ensure that individual members, who are also business rivals, can retain unique technology that gives a competitive edge.

Besides improving the quality of chip design, the project also aims to lower the cost of purchasing technology from other companies, according to a report in The China Post.

This announcement comes amidst trying times for the semiconductor industry. Global demand for chips continues to be soft while the cost of production remains high.

According to a recent report by the US-based Semiconductor Industry Association, worldwide chip sales amounted to $11.8bn (£7.5bn) in February, a 3.3 percent dip from the month before.

Adding to the slowing demand, the cost of making chips continues to soar. The price tag for building a fab currently runs between $2bn to $3bn and is steadily rising.

This cost-cutting drive is increasingly forcing companies to outsource work or to partner with other chip companies on R&D and manufacturing.

For example, Philips has entered an alliance with Motorola and European chipmaker STMicroelectronics that lets the companies share the costs of developing manufacturing technology for 90-nanometer chips and of other projects.

News.com's Michael Kanellos contributed to this report.

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