Surprise trail in TSMC leak leading to Japan highlights intensifying chip war

Audio report: written by reporters, read by AI

Taiwan is reeling from a high-profile leak of advanced semiconductor technology belonging to TSMC — and the focus is not on China, but Japan.

The New York Times reported on Tuesday that Taiwanese prosecutors had arrested and detained three former and current TSMC employees suspected of illegally obtaining the company’s trade secrets.

The chipmaker detected suspicious activity through routine monitoring and reported it to authorities. The intellectual property crime unit of Taiwan's High Prosecutors' Office is now investigating the case for potential violations of the country's national security law.

According to Taiwanese media, TSMC discovered the suspicious behavior last month during routine monitoring and reported it to the authorities. While some initially suspected China, the trail led instead to a surprising link to Japan. Prosecutors conducted a raid on the Hsinchu office of Tokyo Electron, a Japanese equipment manufacturer.

Taiwan's Economic Daily News reported on Wednesday that one of the arrested was a former TSMC employee who joined Tokyo Electron, and the stolen trade secrets were allegedly passed on to Rapidus — a Japanese chip foundry launched in 2022 by the Japanese government and private sector to revive the country's semiconductor industry. The data was reportedly used to adjust equipment under development.

Leak concerns intensify amid 2-nanometer race

According to the Nikkei, the technology suspected to have been leaked involves TSMC’s cutting-edge 2-nanometer process. TSMC, the world’s top chip foundry with a 67.6 percent market share, plans to mass-produce 2-nanometer chips later this year and has already signed deals with major tech firms, including Apple and Nvidia.

Samsung Foundry’s AI6 chip for Tesla, ordered last month, is also being developed using a 2-nanometer process and is expected to enter mass production between 2027 and 2028 at its Taylor, Texas, plant. Rapidus aims to begin mass-producing its own version of the chips by 2027 and unveiled a prototype last month. However, it has yet to secure major clients and still lacks core capabilities, relying on technological support from IBM in the United States and IMEC in Belgium.

Only TSMC, Samsung and Intel are currently capable of operating advanced chip foundries at this level. The latest allegations suggest that TSMC’s 2-nanometer technology may have been leaked to help Japan’s Rapidus enter the elite circle of chip producers.

The scandal comes as Taiwan’s once-cozy ties with Japan show signs of strain.

TSMC’s Kumamoto plant in Japan — which began operations just 28 months after its announcement — recently completed construction, and plans for a second facility were quickly unveiled. However, during last month’s earnings call, TSMC did not provide specific details about production timelines for its second Kumamoto plant, sparking speculation that it may be slowing progress in Japan due to its ongoing mega-investments in the United States.

Asian chip powerhouses battle technology leaks

TSMC is expected to begin 2-nanometer chip production in Kaohsiung later this year and is also building a 2-nanometer plant in Arizona — its third facility in the United States following its 3- and 4-nanometer fabs there.

The idea of producing 2-nanometer chips outside Taiwan triggered domestic backlash, with critics warning it could weaken Taiwan’s so-called “silicon shield” and increase the risk of tech leakage.

As the strategic importance of semiconductors grows globally, concerns over technology leaks are mounting not only in Taiwan and Korea but also in China.

According to Taiwanese prosecutors, this is the first case to fall under the 2022 revision of the country’s national security law, which reclassified unauthorized access to core national technologies as espionage.

Last month, according to the South China Morning Post, a Shanghai court sentenced 14 former employees of HiSilicon — Huawei’s semiconductor subsidiary — to prison for stealing confidential information to launch a telecom chip startup. Meanwhile, in Korea, a former SK hynix employee based in China is currently standing trial at the Seoul Central District Court for allegedly leaking advanced memory technology to HiSilicon in pursuit of a new job.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.

BY SHIM SEO-HYUN [yoon.soyeon@joongang.co.kr]