TSMC Tech Leak in Taiwan Highlights Stakes in Battle for Chip Supremacy

Alleged theft of sensitive information poses risks to island's strategic tech leadership

- Yip Wai Yee

TAIPEI - An alleged trade secret leak targeting Taiwan Semiconductor Manufacturing Technology's (TSMC) most advanced technology has underscored the critical need for robust security measures in a sector where competition is fierce and the stakes are high.

The alleged theft of sensitive information related to the company's next-generation 2-nanometer (nm) process could erode not just customer confidence but also pose risks to Taiwan's strategic technological leadership, analysts said.

"Taiwan's competitive advantage comes not just from the scale of TSMC's production but also from its innovations in semiconductor design and manufacturing," said Professor Julien Chaisse, an expert on international law at City University of Hong Kong.

"Losing key technologies or research could allow other global players to catch up, weakening Taiwan's leadership especially against competitors like the US, China, and South Korea," he told The Straits Times.

The global race for artificial intelligence (AI) dominance is fueling a surge in demand for specialized chips, making them strategically vital in the competition for technological supremacy.

TSMC is the world's largest contract manufacturer of chips, producing the vast majority of the globe's leading-edge chips.

Its 2nm process technology will provide significantly more powerful and efficient chips that are expected to reshape various industries, including consumer electronics and AI applications, when they go into mass production in Taiwan in 2025.

On Aug 5, the Taiwan High Prosecutors' Office said three current and former TSMC employees had been detained without visitation rights over "serious suspicions of violating national security laws".

A probe will examine the motives behind the alleged theft and determine if any classified information had been leaked to other parties, prosecutors added.