Taiwanese prosecutors on Monday indicted a former deputy manager at Taiwan Semiconductor Manufacturing Company (TSMC) for allegedly stealing trade secrets involving technologies designated as national core technologies, with the intent to use them in China.

The defendant, identified by the surname Chen, faces charges under Taiwan’s National Security Act and the Trade Secrets Act. Prosecutors are seeking a seven-year prison sentence.

According to the indictment, Chen conspired with a Hong Kong national between 2023 and 2024 to establish CSMAC, a semiconductor materials analysis company in China. He is accused of copying 21 TSMC documents containing national core technologies and other proprietary trade secrets for use in the new venture.

TSMC, the world’s largest contract chipmaker and a key supplier to companies such as Nvidia and Apple, detected the unauthorized copying through an internal investigation and successfully recovered all duplicated documents. The Hong Kong co-conspirator was not prosecuted because he had died. Chen remains in custody, and Reuters was unable to reach him for comment. TSMC declined to comment on the case.

Prosecutors described this as Taiwan’s first indictment involving the alleged theft of trade secrets related to technologies officially designated as national core technologies for intended use in China.

The case underscores heightened concerns in Taiwan over China’s efforts to recruit Taiwanese semiconductor talent and acquire advanced chip know-how. In response, Taiwan has significantly tightened protections for technologies deemed critical to its economic and national security.

MacDailyNews Take: TSMC clearly plays a central role in the global semiconductor supply chain, making the protection of its intellectual property a matter of strategic importance far beyond Taiwan’s borders.

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China’s cyberspace regulator has officially registered Apple’s on-device generative AI service, Apple Intelligence, for use in the country. This marks a significant step toward the long-awaited launch of the feature for Chinese consumers.

According to Reuters, “China’s cyberspace regulator said on Wednesday that Apple’s on-device generative AI service, Apple Intelligence, has been registered for use on iPhones in China, paving the way for the long-anticipated rollout of the service in the country.”

China mandates that companies register large language models and generative AI services with regulators before making them available to the public. This approval positions Apple to finally introduce its AI capabilities in one of its most important markets.

The service will integrate local AI expertise. Reuters reports, “Apple Intelligence will incorporate capabilities from AI models developed by Baidu and Alibaba, a source familiar with the matter said, speaking on condition of anonymity.”

Alibaba confirmed its involvement in a statement to Reuters: “Its Qwen model will be integrated into Apple Intelligence across Apple’s iPhone (iOS), iPad (iPadOS), Mac (macOS) and Vision Pro (visionOS) operating systems in China.”

A Baidu spokesperson also noted, “Apple is also working with Baidu to develop Apple Intelligence features for Chinese iPhone users.”

The regulator’s statement provided no specific launch date for Apple Intelligence in China.

This development comes at a crucial time for Apple in China, where the company reported a 24.4% year-on-year increase in shipments in the second quarter. The rollout of Apple Intelligence could further strengthen its competitive position in a market where consumers have eagerly awaited these AI features.

MacDailyNews Take: Clearly good news for Apple and should be for Apple’s – and Alibaba’s – stock prices, too.

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In a challenging quarter for the global smartphone industry, Apple has once again demonstrated why the iPhone remains a powerhouse brand. According to recent data from IDC, while overall smartphone shipments tumbled, Apple’s shipments surged—highlighting the company’s strategic resilience in the face of rising costs and weakening demand.

The Broader Market Struggles

The second quarter of 2026 was tough for the smartphone sector. Globally, shipments fell 6.7% year-over-year to approximately 277.5 million units, marking the second consecutive quarter of decline. In China—the world’s largest smartphone market—shipments dropped 4.3% to 66 million units, extending a streak of five straight quarterly declines.

A key culprit? The ongoing memory crisis. DRAM and NAND flash costs have skyrocketed (up nearly 300% in some cases), squeezing manufacturers who rely heavily on low-end devices. Many Android vendors responded by raising prices or trimming budget models, which discouraged consumers from upgrading. Government subsidies that previously propped up demand also began to fade.

This created a polarized market: low-end segments contracted sharply, while premium players with stronger supply chains and brand power pulled ahead.

Apple’s Standout Performance

Against this backdrop, Apple shone brightly. In China, iPhone shipments grew a remarkable 24.4% year-over-year, boosting Apple’s market share to 18.1% (second place behind Huawei). Globally, reports indicate Apple achieved its strongest-ever Q2 for iPhone shipments, with growth in the range of 3-24% depending on the source, pushing its worldwide share toward record highs around 20%.

Why the success? Several factors converged:

• Price Stability: While competitors hiked prices due to component costs, Apple held steady. This gave hesitant buyers a compelling reason to purchase rather than delay.

• Strong Demand for iPhone 17 Series: Early signaling of potential future price increases encouraged preemptive buying. The latest lineup delivered one of Apple’s strongest refresh cycles.

• Premium Positioning: Apple’s focus on high-end devices insulated it from the low-end crunch. Memory costs represent a smaller portion of its bill of materials, and its locked-in supply chain provided an edge.

• Brand Loyalty and Promotions: In China, targeted discounts and promotions (especially ahead of the 618 shopping festival) amplified momentum, even as the overall market softened.

IDC analysts noted that Huawei and Apple were the only major vendors posting growth in China, thanks to holding prices while others raised theirs. Arthur Guo, Senior Analyst at IDC China, highlighted how this dynamic gave buyers a “reason to go ahead and purchase.”

What This Means for the Industry

The memory crisis is accelerating a two-tier market. Premium brands like Apple and Samsung are expanding share by leveraging scale, supply security, and desirable features. Mid- and low-tier vendors face painful adjustments—shifting toward higher-margin models while struggling to convince price-sensitive buyers to pay more.

For Apple, this isn’t just survival, it’s dominance. With iPhone shipments hitting record Q2 levels amid a downturn, the company is well-positioned for the rest of 2026. Analysts project Apple’s full-year market share could reach a historic 22%.
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MacDailyNews Take: Challenges remain, of course. Cost pressures could intensify later in the year, and competition (especially from Huawei in China) is fierce. Yet Apple’s ability to thrive where others falter underscores a timeless truth in tech: premium experiences, strong ecosystems, and smart pricing win loyal customers, even in tough times.

As the smartphone market navigates this memory-induced turbulence, Apple’s iPhone success story offers a masterclass in resilience. For investors, fans, and competitors alike, it’s a reminder that not all phones are created equal.

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[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]

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