Taiwan Semiconductor Manufacturing Company (TSMC) has confirmed a major security breach involving its cutting-edge 2nm chip technology. The company disclosed that several employees attempted to steal critical trade secrets related to its 2nm process, with three engineers arrested and others disciplined. The leaked information may have been passed to employees of Japanese semiconductor equipment giant Tokyo Electron (TEL).

The incident came to light in late July through internal monitoring, which detected unusual access to sensitive files. TSMC launched an immediate investigation and discovered that employees had used personal mobile phones to photograph confidential documents displayed on company-issued laptops during remote work sessions. These actions circumvented the firm's strict on-site security protocols.

According to Taiwan's High Prosecutors Office, six locations were raided between July 25–28. Six engineers were detained, and three—including two current and one former TSMC employee—were formally arrested. The investigation revealed over 1,000 confidential images related to 2nm process technology were illicitly obtained. One engineer was even caught exchanging sensitive material with a TEL employee at a local Starbucks.

TSMC confirmed the arrests in a statement released August 5, asserting a “zero-tolerance policy” for breaches of trade secret protection. The company emphasized that it acted swiftly upon detecting the violation and has initiated legal action against the individuals involved.

The breach is reportedly linked to a Tokyo Electron employee, though both TSMC and prosecutors have avoided naming the company directly. However, reports indicate authorities searched TEL's offices in Taiwan's Hsinchu Science Park. TEL is a key equipment supplier to TSMC and a major shareholder in Japan's Rapidus Corporation—a startup racing to commercialize 2nm chips by 2027 with technical assistance from IBM.

TSMC's 2nm node, known as N2, is expected to enter mass production later this year. It will be the foundry's first process to adopt gate-all-around (GAA) nanosheet transistors and is seen as a crucial technology for next-generation smartphones, AI accelerators, and high-performance computing. With capital expenditures exceeding $30 billion annually, TSMC, Samsung, Intel, and Rapidus are the only companies actively pursuing 2nm manufacturing.

Industry analysts warn that any unauthorized technology transfer could significantly accelerate competition. TSMC's statement underscores its commitment to safeguarding its intellectual property and maintaining operational integrity. The company pledged continued cooperation with law enforcement and vowed to enhance its internal security measures to prevent future breaches.

Legal experts note the case falls under Taiwan's National Security Act, which classifies advanced semiconductor process technologies—including those below 14nm—as protected “core critical technologies.” Unauthorized use or disclosure is considered a criminal offense.

As of now, prosecutors are continuing their investigation to determine the full extent of the leak and whether the trade secrets reached external entities, including foreign corporations. TSMC has not disclosed how many employees are ultimately implicated.

The case has sent shockwaves through the global semiconductor industry, raising concerns over supply chain security and the potential geopolitical ramifications of advanced technology leaks.