To protect its semiconductor supremacy, Taiwan has, for the very first tim,e invoked its national security legislation to prosecute any case involving trade secrets of Taiwan Semiconductor Manufacturing Company (TSMC), the multinational giant in producing high technology chips.
This is happening at a time of heightened global competition in the technology industry, and this fact shows that the island is keen to ensure its economic livelihood is not drained by its competitors.
Defection of Big Dig Engineer Leads to Inquiry
This increased attention was triggered by the exit of a long-term TSMC engineer, Wei-Jen L, in July 2025. Having served the company for 21 years, Lo went to Intel, a large American competitor.
The move was seen as a potential threat to national security, and Taiwanese prosecutors hastened to start an investigation. At the end of last month, the police raided the homes of Lo in Taipei and Hsinchu, taking away computers and storage devices. His stocks and properties were also seized in court, and this indicates the seriousness of the accusations.
According to prosecutors, the semiconductor technologies are considered to be the heart of industrial power in Taiwan, and any form of compromise may destroy its competitive advantage in the international market.
Headquartered in Hsinchu, the busy technological centre in Taiwan, TSMC manufactures most of the advanced chips in the world that are being used in smartphones, cars and other products. The change in attitude of officials to treat such incidents with more rigour than before has been made possible by the 2022 law that puts chip trade secrets on the same level as national security.
Historic Indictment of Supplier of Equipment
On December 2, 2025, the Taiwanese subsidiary of the Japanese company Tokyo Electron, which provides equipment to TSMC, was indicted by the prosecutors in a parallel case that increased such efforts.
The accusations are based on the alleged inability of the company to prevent a former employee who has stolen sensitive information on the most advanced chips of TSMC. It is the first corporate indictment of the National Security Act of Taiwan in the case of violation of trade secrets relating to chips.
The indictment holds Tokyo Electron guilty of failing to safeguard proprietary information that could have been used by foreign parties. Authorities stressed that such violations jeopardise the global reputation of Taiwan in the semiconductor production, which is a source of critical source to its economy and global distribution chains.
Wider Significances of World-Technology Competition
These moves are made when countries around the globe are in a frenzied attempt to strengthen domestic chip manufacturing. An example of this is the United States, which has invested billions in Intel, a national powerhouse that has increased tensions over talent mobility in the industry. Intel has distanced itself in the Lo case, claiming the movement of employees is normal in the competitive world.
The aggressive policy of Taiwan is an indicator of a new wave of protectionism in the high-tech industry, where intellectual property is synonymous with national security. With geopolitical strains increasing with issues of supply chain weaknesses, this plan will prevent defections and espionage.
The experts in the industry caution that even though it might strengthen the secrets of TSMC, it has the likelihood of stifling innovation by limiting the movement of the workforce.
Finally, the case of Taiwan, which appeals to the national security laws, highlights how serious the stakes are within the semiconductor industry, where a single breach may redefine economic terrains. As the investigations continue, the world is monitoring how this level of security and openness will change.