Taiwan arrests six in probe of TSMC chip technology leak
The chipmaker to Nvidia reported a number of former and current staff to authorities on suspicion they illegally obtained core technology. A total of six people were arrested, with two posting bail and one released afterward, said Taiwan High Prosecutors Office spokesman John Nieh.
Prosecutors searched the homes of some staff between July 25 and July 28, the agency said in a statement. It's now trying to find out if data had been leaked to other parties.
TSMC is the world's most advanced maker of semiconductors, from Nvidia artificial intelligence accelerators to Apple iPhone processors. The case coincides with a quickening race by the likes of Meta Platforms and DeepSeek to develop AI in the post-ChatGPT era, which requires billions of dollars in servers and data centers.
On Tuesday, the Nikkei reported that TSMC fired several employees suspected of trying to obtain critical information on 2-nanometer chip development. That next-generation semiconductor process is entering mass production in the second half of this year.
Local investigators also searched the Taiwanese premises of Japanese supplier Tokyo Electron, the Financial Times reported. Company representatives declined to comment.
TSMC has taken disciplinary action against personnel involved and initiated legal proceedings, the company said in a statement without elaborating. It conducted an internal investigation and identified the issue "early,' the firm added in its statement.
The case shines a spotlight on TSMC, one of the companies at the heart of the global infrastructure boom.
Investment in chipmaking development is at an all-time high, as TSMC and closest rival Samsung Electronics set aside more than $30 billion in annual capital expenditures, while U.S. and Chinese companies vie to develop the most advanced technology.
China's progress has stalled several generations behind TSMC, with Huawei Technologies and Semiconductor Manufacturing International Corp. now fabricating silicon at 7 nm. In the U.S., Intel Corp. is at a more advanced stage.
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Nikkei Asia
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Nvidia, AMD to pay 15% of China chip sale revenue to US, official says
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Japan Times
8 hours ago
- Japan Times
Espionage and tariffs can't tarnish TSMC's crown
An attempt to steal trade secrets from the world's largest chipmaker and renewed tariff threats on semiconductors is bending Taiwan's "silicon shield.' But it's not breaking just yet. Still, heavy is the head of Taiwan Semiconductor Manufacturing Co., whose technology everybody wants a piece of. Less than a day after news broke that TSMC fired several employees for a suspected attempt to obtain critical information on its cutting-edge manufacturing, U.S. President Donald Trump threatened new chip tariffs "of approximately 100%.' On Thursday, Taiwan confirmed that TSMC is exempt from the latest levies due to its investments in the U.S. But the president still sowed a lot of confusion after stating in a recent interview that Taiwan was "coming over and spending $300 billion in Arizona, building the biggest plant in the world.' TSMC had previously only committed $165 billion, suggesting negotiations might not be over. Trump likely realized that new, sky-high tariffs on TSMC would be a blow to U.S. tech ambitions. Domestic titans at the heart of maintaining America's lead over China, such as Nvidia and Apple, are TSMC's biggest customers. And fresh levies would be an own-goal for the Stargate artificial intelligence infrastructure plans Trump announced earlier this year, which rely on hundreds of thousands of advanced chips. The news of a tariff reprieve helped drive TSMC's shares to a record on Thursday. TSMC's multibillion-dollar expansion efforts in the U.S. haven't always gone over well at home. Some patriotic Taiwanese want the chipmaker to keep core technologies within the self-ruled island as a safeguard from potential Beijing aggression. But expanding manufacturing to the U.S. will only strengthen Taiwan's alliance with Washington and give its footprint room to grow. It's also worth recognizing that TSMC and Silicon valley are on the same side when it comes to countering China. Still, tariffs may not be the company's biggest headache. The potential corporate espionage is far more than a run-of-the-mill commercial intellectual property theft. It's being investigated under Taiwan's national security law and has the potential to spiral into a broader geopolitical spat. At this stage, here are more questions than answers. The scope of the leak, the perpetrator and the motive haven't been disclosed. Still, TSMC has said it was able to identify the issue "early.' On Thursday, Tokyo Electron confirmed that a former employee was involved in the case, though said an internal probe hadn't found evidence of the confidential information being shared with a third party. Local prosecutors have made half a dozen arrests and the people involved were reportedly targeting information on the company's 2-nanometer production — the most advanced chip manufacturing technology in the world. Besides TSMC, there are only three other companies that are actively trying to mass produce the cutting-edge chips: Samsung Electronics, Intel and Japan's long-shot startup Rapidus. Many of them rely on the same suppliers, such as Tokyo Electron. Acquiring the critical know-how for smaller chip node production can cost tens of billions of dollars in research and development. There are other reasons so few firms are capable of attempting this. Even with the R&D knowledge, it still requires massive investments in fabrication plants and tooling equipment, as well as access to a very limited supply of trained engineers to compete at scale. Taiwan and TSMC have spent decades building this foundation and there aren't clear shortcuts to leapfrog the company's dominance — even unethical ones. Countries and companies have poured billions trying to eclipse TSMC's virtual monopoly on advanced chipmaking, but these hard-won gains can't be spread (or stolen) overnight. The firm is also no stranger to talent poaching and other attempts at IP theft; it's a systemic issue in an industry where the strategic importance is so high. The most recent case is spurring international "whodunnit" intrigue, but more importantly it shows that the company has beefed up internal security protocols to rapidly respond. It can't be overstated how important it is for TSMC to maintain its technology edge. Some 24% of the most-recent quarterly revenue came from its 3-nanometer tech. Demand is already high for the company's next-generation nodes, set to go into mass production later this year. TSMC's dominance gives it the power to set prices at a time when the foreign exchange rate is unfavorable and trade uncertainty looms. This tech advantage has not just proven crucial for TSMC's business. It is giving Taiwan's government leverage via so-called semiconductor diplomacy. The potential leak gives new fuel to critics of President Lai Ching-te, who has had a rough few weeks. As the first chips-related case involving the National Security Act, it's imperative that authorities investigate and respond to the fullest extent of the law. Taipei must set a precedent with this case to deter any future attempts. As my colleague Howard Chua-Eoan has written, history shows us that technological secrets and monopolies have a hard time staying that way in the long run. For now, TSMC is selling the shovels during a global AI gold rush. Even tariff threats and espionage attempts can't tarnish it's crown just yet. Catherine Thorbecke is a Bloomberg Opinion columnist covering Asia tech.
Japan Times
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