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Taiwanese prosecutors have detained three individuals — two current TSMC employees and one former staff member surnamed Chen — over allegations of stealing trade secrets from Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest chip foundry. The detentions took place late last month following a TSMC internal investigation that uncovered unauthorized access to company information.
Two additional suspects were released on bail, while another was released without bail. Authorities suspect the detained individuals of violating Taiwan’s national security law, though no detailed identities have been disclosed.
TSMC stated it initiated legal action and disciplinary measures against those involved after routine monitoring detected suspicious activity. The company’s early detection system prompted swift internal inquiries, leading to the identification of personnel linked to the breach. The matter is now under judicial review, preventing further public disclosure from TSMC.
According to Nikkei Asia, the case involves attempts by several former employees to obtain highly sensitive information related to TSMC’s 2-nanometer chip technology — considered the industry’s most advanced in density and energy efficiency. Investigations have not yet determined whether the stolen information was transferred to external parties or the full scope of the leak.
Taiwanese media outlet United Daily News reported that prosecutors also searched offices of Japanese chip equipment supplier Tokyo Electron, though both the company and prosecutors declined comment.
TSMC, a critical supplier to Nvidia, Apple, and Qualcomm, reiterated its zero-tolerance policy on trade secret violations, vowing to prosecute offenders to the fullest extent of the law.
Taiwan has placed China’s tech giants Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC) on its export control list, requiring Taiwanese firms to obtain government approval before exporting any products to these companies.
The additions were part of a recent update to the Ministry of Economic Affairs’ trade administration strategic high-tech commodities entity list, announced on June 10. Alongside Huawei and SMIC, the update included 601 entities from countries such as Russia, Pakistan, Iran, Myanmar, and China, including groups like the Taliban and al Qaeda.
Taiwan’s trade administration stated the review and update were driven by “prevention of arms proliferation and other national security considerations.” It urged manufacturers to comply with export control regulations, fulfill verification obligations, and carefully assess transaction risks.
Taiwan is home to TSMC, the world’s largest contract chipmaker and a key supplier to AI leader Nvidia. Both Huawei and SMIC are pivotal to China’s ambitions in chips and artificial intelligence and have been striving to close the technology gap.
Taiwan already enforces strict chip export controls on Taiwanese companies that manufacture domestically or supply Chinese firms, reflecting ongoing tensions between Taipei and Beijing, which claims Taiwan as its territory.
Huawei is also subject to U.S. export restrictions barring access to American and foreign-made goods involving U.S. technology, including chips manufactured by TSMC. Last year, TSMC was ordered by the U.S. Commerce Department to halt shipments of certain chips to Chinese customers, including Huawei and Sophgo, a Chinese chip designer linked to Huawei’s AI processor.
Taiwan’s government has repeatedly pledged to combat Chinese efforts to steal technology and attract Taiwanese chip talent, emphasizing the strategic importance of the semiconductor sector.
SMIC, China’s largest chipmaker, continues to invest heavily to expand capacity amid U.S. export curbs, aiming to boost China’s domestic semiconductor capabilities.