Intellectual Property Theft Incident Raises Questions About TSMC’s Security

TSMC, the world’s premier semiconductor foundry, faces a significant corporate security challenge as authorities investigate allegations of intellectual property theft. Three individuals stand accused of misappropriating highly sensitive technical secrets related to the company’s groundbreaking 2-nanometer chip technology—the very innovation that underpins TSMC’s competitive advantage in advanced semiconductor manufacturing.

Core Technology at Risk

The alleged theft targets what industry experts consider TSMC’s crown jewel: proprietary manufacturing processes for next-generation 2nm chips. These advanced processors promise substantial gains in both computational performance and energy efficiency compared to current technologies. For a company that has built its market dominance on technological leadership, the potential compromise of such critical intellectual property represents a serious vulnerability.

This security breach not only raises immediate concerns about protective measures within TSMC’s operations but also poses longer-term questions about the company’s ability to safeguard its technological edge. In the intensely competitive semiconductor industry, where research and development investments reach billions annually, proprietary manufacturing knowledge constitutes the most valuable asset.

Strong Market Position Despite Challenges

Despite these security concerns, TSMC continues to demonstrate strong market positioning. The company has secured a landmark agreement with Apple for its upcoming iPhone 18 series, which will utilize the very 2nm technology at the center of the theft allegations. The A20 processors manufactured using this technology are projected to deliver 15% greater performance alongside 30% improved power efficiency over current 3nm chips.

Should investors sell immediately? Or is it worth buying TSMC?

Production capacity projections remain equally impressive. TSMC plans to manufacture between 45,000 and 50,000 wafers monthly by late 2025, with ambitions to double this output throughout 2026. This substantial commitment from a key customer like Apple signals continued industry confidence in TSMC’s technological roadmap despite recent security incidents.

Broader Industry Context and Expansion Plans

Beyond immediate security concerns, TSMC navigates complex geopolitical considerations. Recent comments from U.S. Treasury official Scott Bessent highlighted global dependence on Taiwan’s semiconductor industry, drawing comparisons to historical oil embargo scenarios to underscore strategic vulnerabilities.

Concurrently, TSMC continues to advance its technological ambitions. The company has accelerated construction timelines for its A14 fabrication facility, which will produce even more advanced 1.4nm chips. This aggressive expansion reinforces TSMC’s determination to maintain technology leadership despite challenges. With a commanding 74% market share in advanced nodes below 7 nanometers, the company remains the undisputed industry leader.

The coming months will prove critical as TSMC addresses both security vulnerabilities and growing geopolitical pressures while maintaining its technological advantage. While the Apple partnership demonstrates strong market confidence, recent events have undoubtedly raised questions about protective measures surrounding the company’s most valuable asset: its intellectual property.