Taiwanese prosecutors have arrested six people suspected of stealing trade secrets from Taiwan Semiconductor Manufacturing Co (TSMC), following a report by the company about possible illegal access to core technology by former and current staff.

TSMC, which produces chips for firms such as Nvidia and Apple, alerted authorities, leading to home searches between July 25 and July 28, 2025 according to the Taiwan High Prosecutors Office.

Two suspects posted bail, and one was released, while investigators are examining whether any data was leaked to outside parties.

TSMC fired several employees suspected of trying to access confidential information related to 2-nanometre chip development, a process scheduled for mass production later this year.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ TSMC has faced repeated intellectual property theft attempts over more than a decade

This latest incident follows a well-documented pattern of attempts to steal TSMC’s proprietary technology, most notably the high-profile case against Chinese rival SMIC that began in 2006.

That earlier dispute resulted in TSMC winning a trade secrets verdict in 2009, ultimately leading to a $200 million settlement and TSMC acquiring an 8% equity stake in SMIC by 20101.

The settlement demonstrated TSMC’s strategic approach to IP protection. Rather than completely crushing a competitor, the company chose to maintain industry stability while securing compensation and partial ownership.

TSMC’s current swift internal detection and reporting to authorities shows the company has learned from past experiences and built robust monitoring systems to identify unauthorized access to sensitive files2.

The recurring nature of these incidents, spanning from major competitors to individual employees, highlights how TSMC’s technological leadership makes it a persistent target for IP theft attempts.

2️⃣ Taiwan now treats semiconductor trade secret theft as economic espionage under national security law

The current TSMC case marks the first prosecution under Taiwan’s amended National Security Act, signaling a significant shift in how the government views semiconductor IP theft34.

Unlike previous cases handled through civil litigation, this investigation treats the alleged theft of 2nm chip technology as a matter of national security rather than corporate competition.

The 2nm process technology at the center of this case represents Taiwan’s most advanced semiconductor manufacturing capability, critical for AI accelerators and high-performance computing applications entering mass production this year5.

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