Taiwan Semiconductor Manufacturing Co. has dismissed several employees after internal monitors flagged unauthorised attempts to obtain confidential information on its next-generation 2-nanometre chip process. The world’s largest contract chipmaker said it has begun civil and criminal proceedings, describing the incident as an isolated breach caught by its security systems. Taiwan’s Intellectual Property Branch of the High Prosecutors Office has detained three people—two current or former TSMC engineers and a third associate—on suspicion of stealing trade secrets in what officials say is the first case handled under amendments to the National Security Act aimed at protecting critical technologies. Investigators searched homes, workplaces and the Taipei offices of Japanese supplier Tokyo Electron as they examine whether the data were passed to Japan’s state-backed foundry start-up Rapidus. Tokyo Electron confirmed it has fired an employee at its Taiwan unit and is cooperating fully with the probe, adding that its own review found no evidence confidential information was shared with third parties. The equipment maker’s shares fell about 3% in Tokyo trading, while attention focused on potential supply-chain vulnerabilities across Asia’s chip sector. Separately, Taiwan’s National Development Council said TSMC will be exempt from US President Donald Trump’s proposed 100% tariff on imported semiconductors because the company is already building fabrication plants in Arizona. The exemption sent TSMC’s Taipei-listed shares up roughly 5% to a record high, partially offsetting investor concerns over the security breach. Authorities indicated the tariff waiver would not extend to all Taiwanese chipmakers, and they pledged continued monitoring of both the espionage investigation and US trade measures.