Taipei, Taiwan
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Taiwanese authorities have detained three current and former employees of the world’s largest chip manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC), for allegedly stealing trade secrets, prosecutors said Tuesday.
Law enforcement officers questioned several suspects and witnesses late last month. They searched their homes and detained three of them over “serious suspicions of violating national security laws,” the intellectual property branch of the Taiwan High Prosecutors Office said on Tuesday.
TSMC produces more than 90% of the world’s advanced semiconductor chips that power everything from smartphones and artificial intelligence (AI) applications to weapons, with key clients including Apple and Nvidia.
After an internal investigation, the major Taiwanese exporter raised suspicions with authorities that its “core technologies” may have been illegally accessed by former and current staffers.
The prosecutor’s office said it will probe the motives behind the alleged theft of trade secrets and whether TSMC’s proprietary information had been leaked to other parties. It’s the first case of its kind since Taiwan tightened its national security law to protect its key technologies in 2022.
Nikkei Asia first reported on Tuesday that TSMC had fired staffers suspected of illegally obtaining business secrets related to the manufacturing technology for the company’s 2-nanometer chip, the most advanced processor in the semiconductor industry that is expected to go into mass production this year.
Super-advanced semiconductor chips are difficult to make because of the high cost of development and the level of knowledge required, meaning much of the production is concentrated in just a handful of suppliers, such as TSMC, Intel, Samsung and Rapidus.
TSMC said it discovered the potential trade secret leak after unauthorized activities were detected during routine monitoring.
“TSMC has taken strict disciplinary actions against the personnel involved and has initiated legal proceedings,” the company said in a statement. “Such violations are dealt with strictly and pursued to the fullest extent of the law.”
Taiwanese local media reported that a former TSMC employee now works at top chip manufacturing equipment supplier Tokyo Electron Ltd., and that the Japanese firm’s Taiwan office was raided by investigators.
On Thursday, Tokyo Electron confirmed it had dismissed an employee of its Taiwan subsidiary who was involved in the case, and said the company was cooperating with authorities.
“As of now, based upon the findings of our internal investigation we have not confirmed any evidence of the respective confidential information shared to any third parties,” it said in a statement.
A breach of TSMC’s key trade secrets, if proven true, could have national security implications for Taiwan, as it could narrow the technological lead the company has over its competitors in advanced chip manufacturing.
TSMC’s technological prowess is what fuels the commonly held belief in Taiwan that the island’s global dependence on its semiconductors serves as a “silicon shield” – a deterrent against a potential Chinese invasion, and a leverage in global diplomacy.
The tightened legislation, which raised penalties for theft of core technologies and banned the use of them in foreign countries, came after years of incidents of Chinese companies obtaining chip manufacturing knowhow by poaching Taiwanese engineers.
This article has been updated with additional information.
