Taiwan arrests TSMC employees for suspected theft of vital technology-related confidential information
Exclusive: Alleged Trade Secret Theft at TSMC Puts AI Race and Taiwan's National Security at Risk
A serious national security issue and potential game-changer in the AI race between the US and China has emerged, as Taiwan Semiconductor Manufacturing Company (TSMC) grapples with the alleged theft of its cutting-edge 2-nanometer chip technology.
TSMC, the world's leading manufacturer of advanced semiconductor chips, produces over 90% of the world's chips below 5nm, making it an indispensable player in the global semiconductor supply chain and a cornerstone of AI development and high-performance computing.
Three current and former employees of TSMC have been detained for allegedly stealing trade secrets related to the company's 2nm chip manufacturing technology, which is far beyond the current mainstream manufacturing technologies. If confirmed, this breach could enable unauthorized parties, potentially China, to bypass years of research and development, narrowing the technological gap in chip manufacturing necessary for AI advancement.
The alleged theft has raised concerns about Taiwan's vulnerability and the need to protect critical intellectual property that underpins not only its own economy but also global technology leadership and security. Given Taiwan’s strategic importance and the ongoing geopolitical tensions in the region, any leakage undermines technological supremacy and could erode the US and its allies’ strategic advantages.
The case marks the first trade secrets prosecution under Taiwan’s National Security Act, highlighting how Taiwan views semiconductor IP theft as a direct national security threat linked to broader geopolitical rivalry. The theft also accelerates the AI race by impacting chip manufacturing leadership, where China’s alleged acquisition of stolen technology could boost its indigenous semiconductor capabilities, thereby challenging US and allied dominance in AI hardware and applications.
TSMC's technological prowess is often seen as a "silicon shield" for Taiwan. Key clients such as Apple and Nvidia rely on TSMC for their advanced chips. The tightened legislation in Taiwan came after years of incidents of Chinese companies obtaining chip manufacturing know-how by poaching Taiwanese engineers.
Investigations into the case are ongoing, with TSMC taking strict disciplinary actions against the personnel involved and initiating legal proceedings. The intellectual property branch of the Taiwan High Prosecutors Office is investigating the case, while Tokyo Electron Ltd.'s Taiwan office was raided by investigators. A former TSMC employee now works at Tokyo Electron Ltd., raising questions about potential collusion.
The theft of TSMC's trade secrets has far-reaching implications, threatening Taiwan’s economic security and the global semiconductor supply chain. It also puts the US-China AI competition at risk, potentially enabling China to leapfrog in semiconductor technology crucial for AI development and national defense systems.
References:
- Reuters
- Nikkei Asia
- Bloomberg
- Taiwan's national security is at risk due to the alleged theft of cutting-edge semiconductor technology from TSMC, leading to concerns about its vulnerability and the need to protect critical intellectual property.
- The stolen technology, if confirmed, could narrow the technological gap in chip manufacturing necessary for AI advancement, potentially enabling unauthorized parties to bypass years of research and development.
- This semiconductor IP theft case is significant, marking the first trade secrets prosecution under Taiwan’s National Security Act, highlighting its view of such cases as direct national security threats linked to broader geopolitical rivalry.
