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TSMC denies reports of trade secret leaks in BASF case

2019/01/07 22:41:57

CNA file photo

Taipei, Jan. 7 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC) on Monday denied reports that some of its confidential information may have been leaked to China through the theft of trade secrets from the Taiwan subsidiary of German chemical giant BASF.

TSMC, the world's biggest contract chipmaker, acknowledged that it is one of BASF Taiwan's clients but said their cooperation did not lead to a leak of trade secrets from the semiconductor company to China.

The theft also did not impose any material impact on the company, TSMC said in a statement in response to local media reports that it was affected by the theft of BASF trade secrets.

BASF produces chemical solutions used in semiconductor manufacturing processes and supplies electronic materials to leading semiconductor manufacturers in Taiwan and abroad, including TSMC.

After receiving a tip-off late last year, the Criminal Investigation Bureau (CIB) launched an investigation and arrested six current and former employees of BASF Taiwan last week, suspecting they violated the Trade Secrets Act by stealing BASF trade secrets and transferring the technology to a Chinese company.

Although BASF produces chemicals for TSMC based on ingredient data provided by the chipmaker, the semiconductor giant said its confidential information remained intact.

Prosecutors said a court in Taoyuan has issued an order to detain five of the current and former BASF employees who were arrested, and the other one has been released on bail of NT$100,000 (US$3,246) but barred from leaving Taiwan.

Prosecutors added that the stolen trade secrets were worth an estimated 100 million euros (NT$3.53 billion).

The theft is believed to have been engineered by a BASF competitor in China that wanted to set up a factory similar to BASF's in Jiangsu province, according to the CIB.

Looking for help, the company hired a 56-year-old retired head of BASF's Taoyuan factory surnamed Lin in 2017 by offering him a monthly salary of 90,000 Chinese yuan (US$13,383), and Lin then poached several engineers from the Taoyuan factory to join the planned Chinese factory.

According to the CIB, the six received about NT$200 million in total payments from the Chinese company for the information leaks.

In a statement, BASF Taiwan, founded in 1969, said the company has worked with prosecutors and police in Taiwan on the case and stressed that it has invested heavily in intellectual property and in protecting its own and its clients' trade secrets.

BASF, which has more than 115,000 employees worldwide, has a workforce of about 750 in Taiwan in factories and offices in Taipei, Taoyuan, Changhua and Kaohsiung as well as an agricultural experimental hub in Pingtung.

(By Huang Li-yun, Pan Chih-yi, Wu Jui-chi and Frances Huang)