[News] TSMC’s 2nm Leak Case: Inside Taiwan’s Chip Protection Strategy, From Patents to Trade Secrets

Amid heated discussions over the alleged leak of TSMC’s 2nm technology, the foundry giant’s internal mechanisms for safeguarding trade secrets and intellectual property are drawing fresh attention. As Liberty Times reports, TSMC has been Taiwan’s top domestic patent applicant for nine consecutive years and has established a unique and robust self-protection system to defend its technological know-how and IP portfolio.

The report explains that Taiwan’s semiconductor supply chain depends mainly on three protection mechanisms: trade secrets, patents, and integrated circuit (IC) layout designs. Patents and IC layout designs provide formal legal protection through official applications, while trade secrets are closely guarded internally by companies and remain undisclosed to the public, the report adds.

Patents

According to Central News Agency, citing data from Taiwan’s Ministry of Economic Affairs Intellectual Property Office, TSMC filed 562 invention patent applications in Q2, securing the top spot among domestic applicants for the ninth consecutive year. Among foreign companies, Applied Materials led with 242 invention patent filings during the same period, the report notes.

However, as Liberty Times highlights, invention patents offer 20 years of protection but require prior disclosure and publication, leaving them open to potential counterfeiting. In contrast, trade secrets remain confidential and can avoid imitation as long as companies enforce strict internal controls—this is why TSMC mainly depends on trade secret protection.

Trade Secrets

The report explains that to achieve trade secret protection, three key requirements must be met: secrecy, economic value, and reasonable measures to maintain secrecy. TSMC has developed its own unique management system, treating trade secrets as competitive advantage management.

According to TSMC’s website, the company launched its “Trade Secret Registration System” in 2013 to record and manage employees’ innovations. In 2024, TSMC further established the “Trade Secret Sustainable Intelligent Management Center,” offering six core services: Intelligent Registration Integration, Intelligent Misappropriation Prevention & Monitoring, Intelligent Automated Services, AI Utility, Green Trade Secret, and Charitable Sharing & Public Benefit.

To put it short, Liberty Times notes that TSMC has built-in a trade secret registration system that creates tangible records for easy management and can leverage big data to analyze engineers’ backgrounds. The system also manages clients and suppliers to prevent contamination from external technologies and block confidential leaks, as per the report. The monitoring mechanisms, thus, can reportedly utilize high-tech recording, enabling rapid evidence collection when litigation is needed.

Regulatory Frameworks

Regarding regulatory frameworks, Liberty Times notes that Taiwan’s “Trade Secrets Act” was enacted in 1996, initially providing only civil liability. The 2013 revision imposed heavier penalties for stealing trade secrets for “extraterritorial” use, with maximum sentences of 10 years.

In addition, Liberty Times adds that the “National Security Act” filled regulatory gaps in 2022—any act that misappropriates trade secrets of national core critical technologies, even if occurring within Taiwan but for the benefit of hostile forces, can result in up to 12 years imprisonment.

Notably, the report suggests that TSMC’s case could mark the first trade secrets case filed under Taiwan’s National Security Act, as it involves alleged illegal acquisition of 2nm process secrets. Since IC manufacturing technology for processes below 14nm constitutes national core critical technology, penalties under the National Security Act can reach up to 12 years imprisonment and NT$100 million in fines, the report adds.

Read more

• [News] TSMC’s 2nm Data Leak Exposes Fragile Triangle: TEL, Rapidus, and Taiwan-Japan Semiconductor Clash
• [News] TSMC Reportedly Fires Staff over Suspected 2nm Leak Ahead of Mass Production

(Photo credit: TSMC)