Trio of ex-TSMC workers held in custody
Taiwan has made headlines after detaining three individuals, including two current employees and one former employee of Taiwan Semiconductor Manufacturing Co (TSMC), for allegedly compromising sensitive trade secrets related to the company's 2-nanometer chip technology. This incident marks the first trade secrets case prosecuted under Taiwan's amended National Security Act, designed to protect core national technologies such as semiconductor manufacturing.
The arrests follow an internal investigation by TSMC after routine monitoring detected unauthorized activity related to cutting-edge nanometer chip technology. The suspects were found accessing sensitive proprietary information, leading to their immediate dismissal by TSMC and prosecution under the strengthened national security provisions designed to combat economic espionage.
Searches conducted by prosecutors extended beyond residences and workplaces, including sites linked to external partners such as Japanese toolmaker Tokyo Electron. However, it has not been confirmed if any stolen data was shared externally.
This case has raised significant investor concern, as reflected by a nearly 3% drop in TSMC's stock on the day the arrests became public. TSMC has stated that it has zero tolerance for actions that jeopardize its operational secrets and will cooperate with law enforcement to protect its competitive advantage.
The investigation was initiated due to suspicion of compromising classified technology used in making 2-nanometer chips. Article 3 of the National Security Act stipulates that core national technologies cannot be reproduced, utilized, or disclosed without authorization. The investigation is also examining whether classified technology has been transferred to a third party.
The race for a leading role in the artificial intelligence era has made cutting-edge chips and memory a prized asset. The two-nanometer wafers are the most advanced design currently in use. The tape-out process for making the first chips using this technology is scheduled to take place next month.
China's progress in chipmaking is several generations behind TSMC, with Huawei Technologies Co and Semiconductor Manufacturing International Corp currently fabricating silicon at 7-nanometers, while Intel Corp is at a more advanced stage in the US. Investment in chipmaking development is at an all-time high, with TSMC, Samsung Electronics Co, US, and Chinese companies aiming to develop the most advanced technology.
Law enforcement officials are investigating the motive behind the alleged intellectual property theft from TSMC. Police and prosecutors have conducted a search of Tokyo Electron's branch at the Hsinchu Science Park, which may be related to the leak at TSMC. However, prosecutors have not announced whether the engineers are acting on behalf of a foreign government or company.
This is the first time Taiwan has invoked the National Security Act's provisions barring Taiwanese from leaking the nation's core technology to foreign governments or commercial entities. The office's intellectual property branch launched a probe into the data breach after TSMC reported the incident to the authorities.
[1] Taiwan High Prosecutors' Office detains three former TSMC employees for alleged trade secrets theft, Nikkei Asia, 2022. [2] Taiwan arrests TSMC engineers over suspected chip technology theft, Reuters, 2022. [3] TSMC employees arrested for suspected theft of chip technology, CNET, 2022. [4] Taiwan detains three TSMC employees over suspected theft of chip technology, The Guardian, 2022.
Technology plays a significant role in the arrests of three former TSMC employees, as the case involves the compromise of sensitive trade secrets related to the company's 2-nanometer chip technology. This cutting-edge technology, considered a prized asset in the race for a leading role in the artificial intelligence era, is the focus of the investigation by law enforcement officials.
