Taiwan Semiconductor Manufacturing Co (TSMC) has started legal proceedings and taken disciplinary action against employees after discovering possible trade secret leaks.

The company, which is a major producer of advanced AI chips, said it found unauthorized activities during routine monitoring.

TSMC said that its monitoring systems allowed it to quickly detect the issue and respond with internal investigations and strict actions against those involved.

The case is now under judicial review, and TSMC said it cannot share further details.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Trade secret theft repeatedly targets cutting-edge semiconductor processes

TSMC’s 2-nanometer technology leak follows a well-established pattern of industrial espionage targeting the most advanced chip manufacturing processes.

The semiconductor industry has faced multiple high-profile cases over the past decade, including TSMC’s previous $200 million legal victory against Chinese competitor SMIC for stealing proprietary manufacturing technology 1.

Other major incidents include Chinese company Fujian Jinhua allegedly stealing Micron’s DRAM technology 2, and Taiwanese authorities arresting six individuals for leaking BASF’s chipmaking materials to China for nearly $6 million 3.

These cases consistently target the most advanced and valuable technologies, as TSMC’s current investigation involves their cutting-edge 2nm process, which represents the next generation of semiconductor manufacturing.

The trend suggests that as companies invest billions in developing breakthrough technologies, the incentives for industrial espionage increase proportionally.

2️⃣ Timing of leak coincides with intensifying 2nm manufacturing race

The breach targeting TSMC’s 2nm technology comes at a critical moment when the company is racing to maintain its manufacturing leadership against Intel and Samsung.

TSMC currently dominates the foundry market with 64.9% share 4 and plans to begin mass production of its N2 process in the second half of 2025 5.

However, Intel has invested over $90 billion in its competing 18A process 6, while Samsung is also developing its own 2nm technology with competitive pricing strategies 7.

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