Taiwan Indicts Tokyo Electron Over Alleged TSMC Secrets Theft

Taiwanese prosecutors have charged Tokyo Electron Ltd for its alleged failure to prevent employees from stealing trade secrets belonging to Taiwan Semiconductor Manufacturing Co (TSMC). This case highlights the growing tensions in the semiconductor industry, a sector critical to both national and economic security in the region. The indictments, announced on March 15, 2024, accuse the Japanese company of violating the Trade Secrets Act and the National Security Act, with prosecutors seeking a fine of up to NT$120 million (approximately US$3.8 million).

According to the prosecutors’ statement, Tokyo Electron has not adequately implemented preventive measures to safeguard TSMC’s proprietary information. While the company is not accused of directly using the stolen data, the allegations stem from a broader investigation into the theft of intellectual property within the semiconductor sector. This investigation began after TSMC reported the theft to authorities earlier this year, prompting scrutiny of the sensitive nature of chipmaking technology.

The charges come on the heels of indictments against three individuals, including a former employee of both TSMC and Tokyo Electron, who are alleged to have conspired to steal sensitive information from Taiwan’s most prominent chipmaker. TSMC, a key supplier for major tech companies such as Apple Inc and Nvidia Corp, has long been a target for intellectual property theft, particularly from entities linked to Beijing, which has been ramping up efforts to enhance its own semiconductor capabilities.

In a related incident last month, authorities searched the home of a former TSMC executive who transitioned to Intel Corp, following accusations that he may have transferred proprietary technology. Intel has since denied any wrongdoing in this matter.

Tokyo Electron is currently attempting to verify the details of the allegations made by Taiwanese authorities. The company, known for its role in providing essential equipment to TSMC and other manufacturers, stated that it has terminated an employee at its Taiwan unit in connection with the ongoing investigation. The company emphasizes its commitment to preventing misconduct among staff and maintains that there is no evidence of sensitive data being leaked to any third parties.

The case has brought Tokyo Electron into an unusual spotlight, especially as Taiwan seeks prison sentences for the individuals involved, citing national security threats. Among those indicted is a former employee identified only by the surname Chen, who allegedly solicited TSMC colleagues to share proprietary technology. Prosecutors claim that Chen aimed to enhance Tokyo Electron’s etching equipment and secure TSMC’s certification for advanced 2-nanometer chipmaking processes.

The ongoing investigation underscores the competitive and often precarious nature of the global semiconductor market. With Taiwan producing the majority of the world’s most advanced chips, its companies remain vulnerable to intellectual property theft, further complicating the dynamics between Asian tech powerhouses.