Tokyo Electron Taiwan Unit Accused in TSMC Trade Secrets Theft Case

• Charges announced on December 2, 2025, mark the first indictment of a corporation under Taiwan’s National Security Act for stealing national core critical technology trade secrets.

• Prosecutors allege the unit lacked preventive measures despite internal rules, leading to corporate criminal liability.

• A former TSMC employee, now at Tokyo Electron, and two current TSMC engineers were indicted in August 2025 for sharing confidential 2nm process information to improve etching equipment.

Discover how Tokyo Electron’s Taiwan unit faces multimillion-dollar fines over TSMC trade secrets theft. Explore the charges, implications, and TSMC’s IP protection efforts in this breaking tech news. Stay informed on semiconductor industry developments—read more now.

What is the Tokyo Electron Taiwan unit’s role in the TSMC trade secrets theft?

Tokyo Electron Taiwan unit has been indicted for its alleged involvement in the theft of trade secrets from Taiwan Semiconductor Manufacturing Co. (TSMC), specifically related to advanced 2-nanometer chip technology. Prosecutors claim the unit failed to implement adequate preventive measures, violating Taiwan’s Trade Secrets Act and National Security Act, despite having internal policies in place. This case highlights growing scrutiny on corporate responsibility in safeguarding critical technology.

How did the theft of TSMC’s 2nm technology unfold?

The incident involves a former TSMC employee, identified by the surname Chen, who joined Tokyo Electron’s Taiwan unit after leaving TSMC. In August 2025, Chen and two current TSMC engineers were indicted for allegedly sharing confidential details about TSMC’s 2nm chip process. This information was purportedly used to enhance Tokyo Electron’s etching equipment, aiming to secure contracts for TSMC’s cutting-edge manufacturing lines. According to Taiwanese prosecutors, the theft targeted “national core critical technology,” making it a severe breach with national security implications. Tokyo Electron has cooperated with authorities and denied any organizational involvement, emphasizing its zero-tolerance policy for staff misconduct. Data from similar past cases shows that IP theft in the semiconductor sector can cost companies billions, underscoring the stakes involved. Expert analysts, such as those from the Semiconductor Industry Association, note that such incidents erode trust and innovation in the global supply chain.

Frequently Asked Questions

What penalties is Tokyo Electron’s Taiwan unit facing in the TSMC case?

Prosecutors are seeking a fine of up to NT$120 million, equivalent to about $3.8 million, against the Tokyo Electron Taiwan unit if convicted. This stems from allegations of failing to prevent the theft of TSMC’s trade secrets under Taiwan’s Trade Secrets Act and National Security Act, marking a precedent for corporate liability in national security matters.

Why is this the first corporate indictment under Taiwan’s National Security Act for trade secrets?

This case is groundbreaking because it applies the National Security Act to a corporation for stealing “national core critical technology trade secrets” from TSMC, Taiwan’s key semiconductor firm vital to global tech security. It sets a new standard for protecting advanced chip technologies that underpin economic and defense interests, as explained by legal experts in semiconductor law.

Key Takeaways

• Landmark Legal Precedent: The indictment of Tokyo Electron’s Taiwan unit under the National Security Act is the first for a company in such IP theft, emphasizing stricter corporate oversight in tech sectors.
• IP Protection Surge: TSMC’s recent actions, including lawsuits against former executives, demonstrate aggressive defense of trade secrets amid rising competition from firms like Intel.
• Industry Implications: Companies must bolster internal controls to avoid liability; stakeholders should monitor outcomes for impacts on semiconductor supply chains and global innovation.

Conclusion

The charges against Tokyo Electron Taiwan unit in the TSMC trade secrets theft case represent a pivotal moment in safeguarding intellectual property within the semiconductor industry. With fines potentially reaching $3.8 million and broader implications for national security, this development signals heightened accountability for tech firms. As investigations continue, industry players are urged to strengthen compliance measures, ensuring the integrity of critical technologies that drive future innovations—stay tuned for updates on these evolving legal proceedings.

TSMC’s Legal Battles

TSMC has been proactive in defending its intellectual property amid increasing threats. In November 2025, the company filed a lawsuit against its former senior vice president, Wei-Jen Lo, who retired in July 2025 and joined rival Intel Corp. as an executive vice president. The suit alleges a high probability that Lo could disclose TSMC’s trade secrets to Intel, breaching his non-compete agreement and the Trade Secrets Act. Lo had claimed he was joining an academic institution, a statement that proved misleading. Taiwanese prosecutors have launched a criminal probe into Lo, seizing digital evidence from his residences and suspecting violations of the National Security Act. Intel’s CEO, Lip-Bu Tan, has refuted the claims as baseless speculation, affirming the company’s respect for intellectual property and its rigorous policies against using third-party confidential data. According to reports from Taiwanese authorities, such cases highlight the vulnerabilities in executive transitions within the competitive chip manufacturing landscape. TSMC’s efforts underscore the importance of robust non-disclosure agreements and swift legal action to protect proprietary 2nm and advanced node technologies essential for AI, 5G, and high-performance computing applications.

The broader context reveals a pattern of IP disputes in the sector. Prosecutors’ emphasis on Tokyo Electron’s lack of “concrete preventive or managerial measures” serves as a warning to multinational firms operating in Taiwan. Industry observers, citing data from the World Intellectual Property Organization, estimate that trade secret misappropriation costs the global economy over $600 billion annually, with semiconductors being a prime target due to their role in national economies. Tokyo Electron’s cooperation with the investigation may mitigate penalties, but the case could influence future contracts and partnerships in the region.

In related developments, the August 2025 indictments of Chen and the two TSMC engineers detailed how personal connections facilitated the unauthorized transfer of sensitive etching process data. This technology is crucial for fabricating nanoscale chips, where precision directly impacts yield rates and performance. By targeting improvements in etching equipment, the alleged theft aimed to give Tokyo Electron a competitive edge in supplying tools for TSMC’s most advanced fabs. Legal experts from Taiwan’s Ministry of Justice have stressed that such actions not only harm individual companies but also undermine Taiwan’s position as a semiconductor powerhouse, contributing over 15% to the nation’s GDP as per official statistics.

TSMC’s lawsuit against Lo further illustrates the human element in these disputes. As a former leader in advanced process development, Lo’s expertise was invaluable, making his potential move to Intel a significant concern. The non-compete clause, standard in high-tech employment contracts, prohibits such transitions to direct competitors for a specified period. Prosecutors’ involvement elevates the matter, with evidence collection focusing on digital footprints that could reveal any pre-departure data exfiltration. Intel’s response aligns with its corporate governance standards, but the incident has sparked discussions on ethical hiring practices in the industry.

Overall, these events reinforce the need for enhanced cybersecurity and employee training in sensitive sectors. As Taiwan bolsters its legal framework, international firms must adapt to avoid similar pitfalls, ensuring that innovation thrives without compromising security.