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TSMC's tight security at Nanjing plant targets tech leaks to China

Taiwanese chipmaker fears safeguards of advanced data won't be foolproof

Most of TSMC's advanced chip facilities are in Taiwan.

HSINCHU, Taiwan -- Even the extensive security measures devised by Taiwan Semiconductor Manufacturing Co. for its new chipmaking plant in mainland China may not guarantee that no advanced technology leaks to Beijing, Chief Information Officer Steve Tso acknowledged Wednesday.

TSMC, the world's largest contract chipmaker by revenue, boasts global tech giants as customers, such as Apple Broadcom, Nvidia and Qualcomm. The Taiwanese manufacturer also serves several mainland companies, including Huawei Technologies' chip unit HiSilicon.

"For our new chip facility in [the southern] Chinese city of Nanjing, IT security is what we are really worried about and spending a lot of effort on," Tso said at a forum hosted by the Taiwan Semiconductor Industry Association. Global technology companies and officials in the West have recently voiced growing concerns about Beijing's aggressive moves to acquire advanced technology by various means.

"We have worked out a security protection plan with the assumption that all of our information going in and out of our [Nanjing] facility will be intercepted and copied," the executive said.

TSMC announced plans to build an advanced facility in Nanjing at the end of 2015. The plant is set to churn out the advanced 16-nanometer chips, adopted by the iPhone 7 range, starting in the second half of 2018. Only TSMC, Samsung Electronics of South Korea and American company Intel possess 16nm or similar technology, with no mainland Chinese counterpart capable of making such advanced chips.

Tight security

TSMC set up two direct data transmission lines between a major site in Taiwan and the Nanjing plant, Tso said. All the data will be fully encrypted, he said, covering automation and equipment, customer product information and production blueprints.

The company's information technology team will incorporate fake data into transmissions between its Taiwan and mainland sites to reduce the possibility of technology leaks, Tso said.

TSMC Chief Information Officer Steve Tso, second from right, told a tech forum on Nov. 15 about the security measures being taken at the company's new chip production center in Nanjing, China.

TSMC will store 90% of chip production information at local servers in China, but keep 10% of the data covering "the most critical and sensitive chip production technology" back in Taiwan, he said. The most sensitive information will be sent to Nanjing on a need-to-know basis, with the material rendered inaccessible after one-time use, according to the executive.

The chipmaker also has adopted isolated firewalls in both Taiwan and mainland China to prevent Nanjing staffers from retrieving and stealing data from Taiwan, he added.

"However, we are afraid that such defense of information security is not yet enough," Tso warned, "and we are still working hard to see how we can make the system free from any leaks."

Any which way China can

TSMC is not the only major global chipmaker with operations in the rapidly growing Chinese market. Intel operates a NAND flash memory chip plant in the northern Chinese city of Dalian, while fellow U.S. company Globalfoundries is building a chip factory in central China's Chengdu through a partnership with the local government. Samsung and South Korean compatriot SK Hynix are expanding memory chip plants in Xi'an and Wuxi, respectively.

China is working relentlessly to develop a competitive chip industry in place of foreign suppliers, devoting money from the central and local governments and luring overseas talent. The New York Times reported last week that U.S. chipmaker Advanced Micro Devices is licensing its technology to Chinese partners, instead of selling designs directly, to avoid scrutiny by Washington. The American chipmaker also is helping its Chinese partners build semiconductor prowess through a joint venture.

Chips carry national security implications, serving as the brain in various electronic devices. Such advanced chip production technologies and related data will be targeted by hackers and those who wish to catch up quickly with market leaders, another chip executive familiar with the matter said. Major chip companies can face several thousand cyberattacks daily by those looking to poach critical information, the executive indicated.

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