World's largest foundry is attacked from within
Plot to steal proprietary 2nm trade secrets from TSMC is thwarted.
When you're the top foundry in the world, you are obviously doing something right compared to the competition. Actually, you might look at this situation and ask, "What competition?" After all, TSMC's market share of approximately 67% is well above the share belonging to the second-place contract chip manufacturer, which is Samsung Foundry. The latter has only a 7.7% market share.
TSMC has a client list (no, not THAT client list) that includes many of the top names in tech, including Apple, Nvidia, MediaTek, Qualcomm, and AMD. The foundry is about to embark on the next generation of chip production using its 2nm process node, which is the cutting-edge in advanced chip manufacturing. The foundry plans to start mass production at the 2nm node later this year.
Prosecutors had to search the homes of some TSMC staff
A company like TSMC guards its trade secrets as though it were Fort Knox. But when the threat comes from inside, that makes it much harder to protect. On Tuesday, Taiwan prosecutors arrested six people, including some current and former TSMC employees, for illegally taking core technology from the foundry. According to Taiwan High Prosecutors Office spokesman John Nieh, two of those arrested posted bail while one was released.
Inside a fab where chips are manufactured. | Image credit-TSMC
Prosecutors were able to nab the six following searches conducted of homes belonging to some TSMC staff between July 25th and July 28th. The investigation now seeks to discover whether the stolen information has been released to other parties. Investigators in Taiwan searched the Taiwanese offices belonging to Tokyo Electron Ltd., a supplier based in Japan.
Today, in a related story, Japan's Nikkei reported that TSMC fired several employees who were working at the foundry while trying to obtain critical and proprietary information about TSMC's 2nm chip development. TSMC told the Nikkei that recently it "detected unauthorized activities during routine monitoring, leading to the discovery of potential trade secret leaks." The foundry also stated that it took "strict disciplinary actions against the personnel involved and has initiated legal proceedings."
TSMC says that it was on to the plot early thanks to an internal investigation it conducted. The information purloined from TSMC is important because Chinese foundry SMIC, the largest in the country, is limited to producing chips using a 7nm node. But this is mostly due to restrictions placed on the sale of advanced lithography equipment that keeps this gear out of the hands of Chinese companies.
Media reports are calling the crime committed by the insiders an attack on national security. The Intellectual Property Branch of the High Prosecutors Office of Taiwan is conducting its investigation under the National Security Act of 2022. This Act is designed to prevent sensitive technology, especially tech related to semiconductors, from falling into the hands of foreign adversaries.
"TSMC maintains a zero-tolerance policy toward any actions that compromise the protection of trade secrets or harm the company's interests. Such violations are dealt with strictly and pursued to the fullest extent of the law."
-TSMC
The Taiwan government has created a list of what it calls "National Core Critical Technologies," which includes technology used to produce integrated circuits (ICs) more advanced than 14nm. Obviously, equipment and technology used to produce 2nm ICs would be on this list. Reproducing, disclosing, and using trade secrets related to the list without authorization is a violation of the National Security Act. This is the first case involving semiconductors to be prosecuted under the Act.
TSMC wants to protect its "competitive advantage"
While TSMC has taken actions to protect its trade secrets, TSMC Chairman and CEO C.C. Wei has said that his foundry's technologies are difficult to duplicate. The company added that it will continue to strengthen its monitoring systems and it will continue to work with the relevant regulatory agencies "to protect our competitive advantage and operational stability."
A statement from the prosecutors office released today confirmed that said that TSMC had conducted an internal investigation and that "TSMC discovered that its national core technology trade secrets had been allegedly illicitly obtained by a former employee in collusion with current employees."
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