Indictments in TSMC Trade Secrets Theft Case

The Taiwan High Prosecutors Office Intellectual Property Branch has indicted three individuals and Tokyo Electron Taiwan Ltd. for the theft of trade secrets related to Taiwan Semiconductor Manufacturing Co. (TSMC)'s 14-nanometer (14nm) technology. The accused include Chen Li-ming, a former TSMC engineer employed by Tokyo Electron Taiwan, another TSMC employee surnamed Chen, and a Tokyo Electron employee surnamed Lu. The charges against the first two individuals involve reproducing trade secrets under the National Security Act, while Lu and Tokyo Electron Taiwan face charges for destroying evidence in a criminal case.

Taipei TimesCentral News Agency (CNA) / Focus TaiwanJapan’s Chip Giant Faces Indictment Over TSMC Secrets Theft

The investigation into Tokyo Electron Taiwan began when prosecutors were examining allegations of theft concerning TSMC's 2nm technology. During this inquiry, they discovered that the company's cloud storage contained additional trade secrets associated with TSMC's 14nm technology. This revelation prompted further legal action against the involved parties.

Taipei Times

Prosecutors are seeking significant prison sentences for the defendants: seven years for Chen Li-ming, eight years and eight months for the second Chen, and one year for Lu. Additionally, they are pursuing a NT$25 million (approximately US$794,356) fine against Tokyo Electron Taiwan, which is in addition to a previously sought NT$120 million fine for violations of the Trade Secrets Act and National Security Act due to inadequate supervision of Chen Li-ming.

Central News Agency (CNA) / Focus TaiwanTaipei TimesJapan’s Chip Giant Faces Indictment Over TSMC Secrets Theft

This case is particularly significant as it highlights the vulnerabilities within the semiconductor supply chain, especially concerning trade secrets that are vital to TSMC's competitive edge in the global market. The prosecution underscores Taiwan's commitment to protecting its technological assets, which are crucial not only for TSMC but also for the broader semiconductor ecosystem.

Japan’s Chip Giant Faces Indictment Over TSMC Secrets Theft

Critics have raised concerns about the potential impact of these indictments on business relationships between Japanese equipment suppliers and Taiwanese chipmakers. The case may lead to heightened security measures within TSMC and other companies to prevent future incidents of trade secret theft. Furthermore, while Tokyo Electron has cooperated with the investigation, the reputational damage and potential disruptions to its business operations could be significant.

Japan’s Chip Giant Faces Indictment Over TSMC Secrets Theft

The Taiwan High Prosecutors Office emphasized the seriousness of the charges, stating that the theft of trade secrets is not merely a corporate issue but a matter of national security. They noted that TSMC's technological advancements are critical intellectual property worth billions, essential for maintaining its market dominance.

Japan’s Chip Giant Faces Indictment Over TSMC Secrets Theft

As the legal proceedings unfold, the outcomes may influence future collaborations between Taiwanese and Japanese firms in the semiconductor industry. The case serves as a warning regarding the importance of safeguarding intellectual property in an increasingly competitive global market.

Japan’s Chip Giant Faces Indictment Over TSMC Secrets Theft