Taiwan Charges Tokyo Electron Over Alleged TSMC Trade Secret Theft

Taiwanese prosecutors have officially charged Tokyo Electron Ltd for allegedly failing to prevent the theft of trade secrets belonging to Taiwan Semiconductor Manufacturing Co (TSMC). This legal action amplifies an ongoing dispute between two pivotal entities in the global semiconductor industry, which is increasingly essential to national and economic security.

The indictment includes four counts of violating both the Trade Secrets Act and the National Security Act. Prosecutors are seeking a fine of up to NT$120 million (approximately US$3.8 million) from Tokyo Electron for its alleged shortcomings in safeguarding TSMC’s proprietary information. In their statement, prosecutors emphasized that Tokyo Electron “has not done its best to carry out preventive measures.” Notably, the company has not been accused of using TSMC’s confidential data.

This latest development follows the charges laid in August against three individuals, including a former employee of both TSMC and Tokyo Electron, who allegedly conspired to steal intellectual property from Taiwan’s leading semiconductor manufacturer. TSMC, which supplies chips to major companies like Apple Inc and Nvidia Corp, reported the suspected theft earlier this year, prompting an extensive investigation into the sensitive nature of chipmaking technology.

Taiwan is a dominant player in the production of the world’s most advanced semiconductors and has frequently faced threats to its intellectual property from entities linked to Beijing. In a related incident last month, prosecutors searched the residence of a former TSMC executive who transitioned to Intel Corp. TSMC accused this individual of potentially transferring proprietary information, claims that Intel has denied.

The case against Tokyo Electron has thrust the company, a manufacturer of essential equipment for TSMC and other chipmakers, into the spotlight. Taiwan officials are pursuing jail sentences for the individuals indicted, citing national security concerns. Among those charged is a former employee identified only by the surname Chen, who allegedly attempted to gain access to TSMC’s confidential data while employed at Tokyo Electron. According to the prosecutors, Chen persuaded former TSMC colleagues to share proprietary technology.

In response to the allegations, Tokyo Electron announced it had dismissed an employee from its Taiwan unit in connection with the investigation. The company has expressed its commitment to cooperating fully with authorities and has reiterated its strict policies against any wrongdoing by its staff. Importantly, Tokyo Electron maintains that there is no evidence that sensitive data was leaked to any third party.

Prosecutors have alleged that Chen’s intention was to acquire technology that would enhance Tokyo Electron’s etching equipment and secure TSMC’s endorsement for use in advanced 2-nanometer chipmaking processes. They also claimed that the three individuals indicted aimed to exploit TSMC’s proprietary technology for use abroad.

As this case unfolds, it highlights the intense scrutiny and pressure facing companies involved in semiconductor manufacturing, particularly in a geopolitical landscape that increasingly prioritizes technological security and intellectual property rights.