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TSMC Sues Former Employee for Giving Samsung Trade Secrets


Trade secrets are all forms and types of financial, business, scientific, technical, economic or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs or codes. The FBI states that U.S national secrets are in jeopardy. The FBI estimates billions of U.S. dollars are lost to foreign competitors every year. These foreign competitors deliberately target economic intelligence in advanced technologies.


In the movie Paycheck, the lead character is a reverse engineer who analyzes his clients' competitors' technology and recreates it and adds improvements beyond the original specifications. To safeguard his clients, at the end of each job he undergoes a "memory wipe" to remove knowledge of his engineering. That's a nice fantasy if you're in that business because when employees get caught stealing their employers secrets in real life, it's usually to jail they go.


Late last week a report surfaced telling us about how TSMC is suing a former employee for giving away their crown jewels to Samsung. With TSMC and Samsung fighting it out for Apple's business every year, this story is an interesting one being that Samsung comes out the winner with Apple, of all companies, rewarding Samsung unknowingly.


In a report published late last week we learn that Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest chip foundry, is suing a former R&D employee on the suspicion that he leaked secrets including but not limited to 28nm process technology to Samsung. South Korea's largest company is a growing competitor in the foundry business.


Dick Thurston, former chief counsel for TSMC stated that "We brought the lawsuit because TSMC Chairman Morris Chang and senior management were convinced we needed to send a message to Samsung, employees and other competitors. The initial technology they focused on was 28nm."


The report further noted that "the suspected leak of technology may have helped Samsung catch up with TSMC in leading-edge 14nm FinFET chips that foundry customers such as Qualcomm and Apple are designing for next-generation mobile devices."


Thurston added that "When TSMC launched its 28 nm products in 2012, the company went unchallenged in that technology node for nearly two years. Any advantage Samsung may have gained over TSMC is very short term."


Analysts say that given TSMC's technology leadership, they were surprised when Samsung came abreast of TSMC in FinFET chips, the first of which are expected to be commercially available this year.


Thurston brought up an interesting point that's hard to pass. "Samsung, while not directly sued, was involved in the case because it likely supported Liang in the hiring of his lawyers and filing of several affidavits in support of him."


Mehdi Hosseini, an analyst with Susquehanna International Group stated that "This is a chess game, and Samsung is playing two steps ahead. If Samsung can slow down TSMC, that will slow down the Chinese handset makers. This is where the strategic initiative comes in."


There's been a lot of news in Apple's blogosphere about Samsung winning Apple's A9 processor and TSMC looking to forward to competing for Apple's A10 business with 10nm processors and a technology called InFO-WLP. TSMC will be breaking ground on the new plant that will house their latest production advances next month. Yet many wonder why Apple signed on with Samsung, their arch rival.


In the end, business is business – but when it comes to Samsung, Apple fans can't forgive them for their patent infringement against Apple and Samsung's attitude in their continuing fight with Apple in the courts.


More baffling perhaps is Apple's ongoing support for Samsung. Apple's iPhone 6 is a smash hit but it doesn't have the best camera, doesn't have the best battery specs, doesn't have the largest display and doesn't provide as much RAM as competing smartphones and yet it's the number one phone because Apple brings their hardware and software together like a symphonic masterpiece.


So couldn't Apple have remained with TSMC with a great processor but not 14nm as payback against Samsung and kick them while they're down to make a point? Yes, without a doubt. So why didn't they? Unfortunately we'll never know the full answer to that question. And it's that contradiction that continues to anger many in the Apple community rightfully or not.


Many will be keeping an eye on the TSMC trial to see how this all plays out, even though we all know that Samsung, the dirty trickster, has a long history of such activities. If the former TSMC employee is proven to have stolen technology to assist Samsung get the leap with 14nm, will Apple do the right thing and dump Samsung on ethical grounds or will they blindly stay the course with them for the sake of a better deal? Only time will tell.


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