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Two former employees of Taiwan Semiconductor Manufacturing Company and a third suspect have been arrested for allegedly stealing proprietary technology from the world’s biggest chipmaker, prosecutors in Taiwan said on Tuesday.
TSMC, which reported the case to prosecutors, said it had taken legal action against the staff after routine internal monitoring found they had been involved in “potential trade secret leaks”. Investigators have also searched the premises of Japanese chip tool maker Tokyo Electron in Taiwan.
The probe marks the first trade secrets case under Taiwan’s national security law since the legislature added provisions to protect key technologies three years ago.
The case also highlights the fierce competition in the race to manufacture the most cutting-edge semiconductors. TSMC makes more than 90 per cent of the world’s most advanced chips and has in recent years widened its lead over rivals Samsung and Intel.
The intellectual property branch of the Taiwan High Prosecutors Office said it questioned several suspects and witnesses between July 25 and July 28, searched their residences and some places of work and arrested three of them on “serious suspicions of violating national security laws”.
The detained suspects include a former TSMC engineer and an engineer who was still employed by the company when it detected the problem but has since been fired, according to prosecutors. The firings were first reported by Nikkei Asia.
Prosecutors declined to explain why Tokyo Electron’s premises were searched as part of the investigation.
“Thanks to our comprehensive and robust monitoring mechanisms, we were able to identify the issue early,” said TSMC. The company declined to provide further details or elaborate on whether the trade secrets had been passed to a competitor, citing an active investigation.
Taiwan included the protection of “national core technologies” in its National Security Act following a series of cases in which Chinese companies obtained chip manufacturing knowhow by poaching engineers in Taiwan.
Among the intellectual property explicitly barred from passing to “foreign hostile forces” and other competitors is manufacturing technology for chips smaller than 14 nanometres. TSMC expects to begin mass production of 2nm chips this year.
The company has in the past fought extended legal battles against competitors that obtained TSMC’s technology through former engineers.
They include cases against a former executive who joined Samsung, the South Korean conglomerate that has long been its closest competitor, and against Semiconductor Manufacturing International Corporation, China’s largest contract chipmaker.
TSMC pledged “zero tolerance” towards actions that compromised its protection of trade secrets.
“Such violations are . . . pursued to the fullest extent of the law,” it said. “We will continue to strengthen our internal management and monitoring systems and will work closely with relevant regulatory authorities as necessary to protect our competitive advantage and operational stability.”
Tokyo Electron declined to comment.
Additional reporting by Harry Dempsey in Tokyo
