Taiwan court sentences Tokyo Electron employee over trade secrets

Former Tokyo Electron Employee Sentenced to 10 Years for TSMC Trade Secret Theft

A Taiwanese court has handed down a severe 10-year prison sentence to a former employee of Japanese chip equipment manufacturer Tokyo Electron for stealing trade secrets from Taiwan Semiconductor Manufacturing Company (TSMC), marking a significant legal precedent in Taiwan’s efforts to protect its vital semiconductor industry.

In addition to the prison term for Chen Li-ming, the New Taipei City court on Monday imposed a fine of 150 million new Taiwan dollars (approximately $4.8 million) on Tokyo Electron and sentenced four other individuals to prison terms of up to six years.

Judge Chang Ming-huang of Taiwan’s Intellectual Property and Commercial Court determined that Chen, who previously worked at TSMC before joining Tokyo Electron’s Taiwanese subsidiary, exploited his relationships with former colleagues to illegally access confidential information. According to court findings, Chen photographed, copied, and transmitted TSMC’s proprietary materials to help Tokyo Electron gain competitive advantages in bidding for TSMC supplier contracts.

While the court acknowledged that Chen’s primary motivation appeared to be improving his personal work performance, Judge Chang emphasized that the defendant’s actions had potentially jeopardized Taiwan’s economic security and the competitiveness of its semiconductor industry.

The case underscores Taiwan’s intensifying efforts to safeguard its technological advantage in the semiconductor sector, which forms the backbone of its export-driven economy. As artificial intelligence applications continue to drive unprecedented demand for advanced chips, protecting intellectual property has become increasingly critical for Taiwan’s national security.

TSMC, one of the world’s most valuable companies with a market capitalization exceeding $600 billion, produces cutting-edge chips for tech giants including Nvidia and Apple. The company’s manufacturing prowess has positioned Taiwan as an indispensable link in the global technology supply chain, particularly as demand for AI-capable processors surges.

The legal proceedings began last August when Taiwanese prosecutors indicted Chen and his co-defendants for trade secret theft. Tokyo Electron stated at that time that it had dismissed an employee involved in the case but maintained that its internal investigation had not confirmed evidence of confidential information being leaked.

Following Monday’s verdict, Tokyo Electron released a statement taking “the court’s finding with the utmost seriousness” and pledged to strengthen its “information management systems and other relevant measures.” However, the company emphasized that neither the court nor its own internal investigation found evidence of organizational involvement by Tokyo Electron in the theft.

TSMC responded to the ruling by reaffirming its “zero-tolerance policy toward any actions that compromise the protection of trade secrets or harm the company’s interests,” adding that such violations “are dealt with strictly and pursued to the full extent of the law.”

Industry analysts note that this case reflects growing tensions in the global semiconductor ecosystem, where companies closely collaborate but also fiercely compete. With chip manufacturing technology becoming increasingly complex and expensive, the value of intellectual property in this sector has skyrocketed.

The sentencing comes amid broader international concerns about technology transfer and intellectual property protection in strategic industries. Many countries, including the United States and European Union nations, have recently strengthened legal frameworks to prevent the outflow of critical technological know-how to competitors.

Taiwan’s semiconductor sector accounts for over 15% of the island’s GDP and plays a crucial role in global electronics supply chains. TSMC alone manufactures approximately 90% of the world’s most advanced chips, making the protection of its proprietary technologies a matter of both economic and national security for Taiwan.

The case sets a precedent for how Taiwan intends to handle future intellectual property violations in its crown jewel industry, sending a clear message that trade secret theft will be met with severe consequences.