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In late 2025, Taiwan made an unusual and high-stakes move to protect the proprietary technologies of Taiwan Semiconductor Manufacturing Company (TSMC), one of the world's most important semiconductor manufacturers. Taiwanese authorities invoked newly strengthened national security laws in response to allegations that a former TSMC executive may have taken confidential information to a major U.S. competitor after departing the company.
This situation underscores the rising importance of trade secrets in advanced technology industries and how governments and businesses are treating intellectual property as a matter of strategic economic and national importance.
What might that mean for business in general? Here are the specifics.
Background: The TSMC Trade Secrets Controversy
TSMC is the largest contract chipmaker in the world, producing advanced semiconductor chips for major technology companies globally. In 2025, TSMC filed a lawsuit in Taiwan's Intellectual Property and Commercial Court against its former Senior Vice President Wei-Jen Lo, alleging that he likely disclosed or transferred the company's trade secrets and confidential information to U.S. semiconductor maker Intel after joining that company.
The lawsuit was based on Lo's employment contract, non-compete obligations, and Taiwan's Trade Secrets Act, and it reflected TSMC's belief that its most advanced technology could be at risk.
In addition to the civil lawsuit, Taiwanese prosecutors took the extraordinary step of investigating the matter under the National Security Act. Authorities executed search warrants at locations associated with the former executive, seized electronic devices and other materials, and even obtained court approval to freeze assets connected to the individual.
The use of national security law signals that Taiwan views the protection of TSMC's advanced chipmaking technology as essential not only to the company's competitive edge, but also to the nation's economic stability and geopolitical position.
Intel has publicly denied any wrongdoing, emphasizing that it maintains rigorous internal policies to prevent the improper use or transfer of third-party confidential information. The company rejected allegations that its hiring of the former executive was tied to any unauthorized acquisition of TSMC intellectual property.
Trade Secrets and National Security: What Is at Stake
Trade secrets are a core component of competitive advantage in industries where innovation cycles are rapid and research and development costs are high. Unlike patents, which are publicly disclosed in exchange for legal protection, trade secrets rely on confidentiality and commercial practices to preserve value.
When trade secrets involve technologies at the cutting edge of manufacturing (such as semiconductor fabrication processes) the potential impact of unauthorized disclosure can be enormous, affecting not only a company's market position, but also national supply chains and broader economic interests.
Taiwan's decision to use national security law to protect TSMC intellectual property reflects growing global concern about the intersection of economic competition and national strategy.
The semiconductor industry is widely considered a linchpin of modern technology infrastructure, and Taiwan's leadership in advanced chipmaking has earned it a central role in global supply networks. In this context, intellectual property disputes are no longer just commercial matters, they can have geopolitical and security implications as well.
What This Means for Businesses and IP Strategy
For business leaders, legal counsel, and IP professionals, the TSMC case highlights several key lessons about the current landscape of intellectual property protection:
Trade secret protection must be robust and enforceable. Companies that depend on proprietary technology should have strong internal controls, employee obligations (such as non-disclosure and non-compete agreements), and monitoring mechanisms to safeguard sensitive information.
Cross-border employee movement raises risks. When key personnel with deep institutional knowledge move between competitors, especially across national jurisdictions, the potential for trade secret exposure increases. Clear contractual protections and exit procedures are essential to mitigate legal and commercial risk.
Governments are increasingly involved. In certain high-technology industries, IP protection is not just a corporate concern; it is central to national economic strategy. This can lead to government intervention or the use of extraordinary legal tools when trade secrets are thought to affect national interests.
International disputes require careful navigation. Multinational companies must balance innovation, recruitment, and competitive strategy with rigorous compliance to avoid allegations of misappropriation or unlawful transfer of confidential information.
The TSMC trade secrets saga emphasizes that intellectual property law, especially with respect to trade secrets, has become a competitive and strategic battlefield. As technology continues to push boundaries and nations invest in innovation leadership, businesses must align their IP strategies with legal compliance and risk management at both corporate and national levels. Failing to do so can have consequences that extend far beyond the boardroom, shaping global technology ecosystems and national security frameworks.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
