Taiwan arrests TSMC employees for technology theft

Taiwan arrests TSMC employees for technology theft

Taiwanese authorities have arrested three current and former employees of the world's largest chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC), on suspicion of stealing trade secrets, prosecutors said Tuesday.

Fixing details

Law enforcement authorities interviewed several suspects and witnesses late last month, searched their homes and arrested three people on “serious suspicion of violations of national security laws.” This was determined by the Intellectual Property Division of the Taipei High Prosecutors Office.

TSMC and its key role in the semiconductor industry

TSMC produces more than 90% of the world's advanced semiconductor chips, which power a wide range of applications - from smartphones and artificial intelligence (AI) to weapons systems. Significant customers include companies like Apple and Nvidia.

Suspicion of illegal purposes

The major Taiwanese exporter raised concerns that its "core technologies" may have been illegally accessed by current and former employees after an internal audit was conducted. Prosecutors have said they will investigate the motives behind the alleged theft of trade secrets and whether TSMC's proprietary information was passed on to third parties. This is the first such case since Taiwan tightened its national security law in 2022 to protect its key technologies.

Layoffs at TSMC

According to a report by Nikkei Asia, TSMC has fired employees suspected of illegally obtaining trade secrets related to the company's manufacturing technology for the 2-nanometer chip, the semiconductor industry's most advanced processor. This is expected to go into mass production this year.

Challenges in chip production

Producing advanced semiconductor chips is extremely difficult due to the high development costs and expertise required. Therefore, production is concentrated on just a few providers such as TSMC, Intel, Samsung and Rapidus.

TSMC's response and possible consequences

TSMC said it has taken strict disciplinary action against the individuals involved and taken legal action after discovering potential leaks of trade secrets through unauthorized activities during routine monitoring. “Such violations will be dealt with strictly and prosecuted to the fullest extent of the law,” the company said.

The security aspect of TSMC's technology

A proven breach of TSMC's key trade secrets, if proven true, could have national security implications for Taiwan because it could limit the company's technological superiority over its rivals in advanced chip manufacturing. TSMC's technological capabilities underpin a widespread belief in Taiwan that the world's global dependence on its semiconductors acts as a "silicon shield" - a deterrent against a possible Chinese invasion and a lever in global diplomacy.

Background to the tightening of the law

The tougher regulations, which increased penalties for stealing core technologies and banning their use in foreign countries, followed years of incidents in which Chinese companies obtained chip-making know-how by poaching Taiwanese engineers.

Reporting was assisted by CNN's John Liu.