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TSMC says its monitoring led to early detection

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Investigations ongoing, motives and scope unclear

By Wen-Yee Lee and Bipasha Dey

Aug 5 (Reuters) - Taiwanese authorities have detained

three people for allegedly stealing technology trade secrets

from Taiwan Semiconductor Manufacturing Co ( TSM ) , the

world's largest chip foundry, Taiwanese prosecutors said on

Tuesday.

The three were detained late last month after TSMC reported that

an internal investigation had shown that former and current

employees had illegally obtained information from the company,

the Taiwan High Prosecutors Office said in a statement. The

prosecutors office said another two people had been released on

bail, and one more had been released.

The three who have been detained - two current staff and one

former employee - are suspected of violating Taiwan's national

security law, it added. It did not disclose their identities

apart from saying that the former staffer was surnamed Chen.

Earlier on Tuesday, TSMC said it had launched legal

proceedings and taken disciplinary action against employees

involved in potential trade secret leaks after detecting

unauthorised activities during routine monitoring.

It said its "comprehensive and robust monitoring mechanisms"

enabled early identification of the issue, leading to internal

investigations and measures against the personnel involved.

TSMC said the legal case, which is now under judicial

review, prevented it from providing further details.

Nikkei Asia earlier reported that the breach involved

several former employees suspected of attempting to obtain

critical proprietary information on TSMC's 2-nanometer chip

technology.

There were no immediate details on the suspected motives or

whether any information had been

passed on, and investigations are ongoing to determine the

scope of the leak and whether any others were involved, the

Nikkei report said.

Taiwanese media outlet United Daily News said prosecutors

and investigators had also searched the offices of Tokyo

Electron, without citing where they had obtained the

information. Tokyo Electron and the prosecutors' office declined

to comment.

TSMC's 2-nanometer chip technology is the most advanced

technology in the semiconductor industry in terms of both

density and energy efficiency, according to the company's

website.

The contract manufacturer, which counts AI industry darling

Nvidia ( NVDA ), iPhone maker Apple ( AAPL ), and Qualcomm ( QCOM )

among its customers, highlighted its zero-tolerance

policy for trade secret violations, and said it would pursue

offenders to the full extent of the law.