In August 2025, Taiwan Semiconductor Manufacturing Company (TSMC) — the world’s leading foundry — faced a serious breach of trust. A group of insiders was caught attempting to steal information about its cutting-edge 2nm process technology, sparking a wave of indictments, employee terminations, and industry-wide concern.

How the Theft Happened

1. The Perpetrators: Three individuals were charged — two current TSMC employees and one former engineer who had joined Tokyo Electron Japan, a key semiconductor equipment maker.
2. The Target: Proprietary data surrounding TSMC’s 2nm node, classified as “national core technology” by Taiwan.
3. The Motive: Prosecutors allege the data would help Tokyo Electron refine chipmaking equipment and secure contracts with TSMC.
4. The Discovery: TSMC’s internal monitoring flagged irregular activity, prompting an internal probe. Authorities were notified, leading to detentions and criminal charges.

Taiwanese prosecutors are seeking 7–14 year prison terms for the accused. TSMC moved swiftly to terminate and discipline employees, underscoring its zero-tolerance stance on IP violations.

Other Recent IP Theft Incidents in Semiconductors

TSMC’s case isn’t isolated. Semiconductor IP theft has been accelerating due to the industry’s geopolitical importance:

1. ASML (2023): The Dutch lithography giant disclosed theft of proprietary data by a former employee in China, tied to advanced EUV lithography technology.
2. Samsung (2022): A former executive was indicted for stealing semiconductor process blueprints with intent to build a competing fab in China.
3. Micron & Others: U.S. firms like Micron have previously battled alleged DRAM trade secret theft linked to overseas actors.

These cases underline a clear pattern: advanced process nodes, memory technologies, and lithography tools are prime targets for espionage.

Impacts on the Industry

1. National Security Risks
2. Advanced semiconductor technologies are now equated with strategic defense assets. IP theft risks not just corporate revenue but also geopolitical power balances.
3. Economic Consequences
4. Even attempted theft undermines competitive advantage. A single leaked process flow or design database can reduce billions in R&D advantage.
5. Supply Chain Trust
6. Foundries and IP vendors rely on trust between partners, suppliers, and governments. High-profile breaches can trigger tighter vetting, export controls, and strained collaborations.
7. Employee Surveillance & Compliance
8. Companies are doubling down on insider monitoring, stricter NDAs, and mandatory compliance training — a cultural shift for talent-heavy industries.

Who Provides Security in Semiconductors?

Protecting semiconductor IP requires multi-layered defense — from hardware-level encryption to supply-chain monitoring. Some leading players include:

1. Rambus – Provides hardware security modules, root-of-trust chips, and secure memory interfaces.
2. Intrinsic ID (part of Synopsys) – Specializes in PUF (Physically Unclonable Function) technology to protect SoC designs.
3. FortifyIQ – Focuses on IP protection against side-channel and fault-injection attacks.
4. Applied DNA Sciences – Offers DNA-based markers for traceability of chips and electronics.
5. Synopsys & Cadence – Integrate security validation into EDA flows to detect vulnerabilities before tape-out.
6. Sofics – Provides circuit-level protection (ESD, tamper-resistance) critical for secure chip interfaces.

Together, these solutions help chipmakers safeguard their crown jewels: the IP and processes that drive the semiconductor ecosystem forward.

Final Thoughts

The TSMC 2nm theft case highlights a stark reality: IP protection is no longer optional — it’s existential. As the world races toward smaller nodes and AI-driven chips, security must evolve alongside innovation.

Companies that fail to protect their IP not only risk financial loss but also jeopardize national security and global technological leadership. The industry must move decisively, balancing innovation with ironclad safeguards.