Key Points
- Former TSMC engineer Chen Li-ming received a 10-year prison sentence for stealing semiconductor trade secrets
- Three additional engineers were sentenced to terms ranging from two to six years
- Tokyo Electron’s Taiwan operations faced a NT$150 million fine (approximately $4.8 million USD)
- Taiwan applied national security legislation to critical chip technology theft for the first time
- TSMC’s security monitoring systems identified unauthorized data access last July, initiating the investigation
Taiwan’s Intellectual Property and Commercial Court issued a 10-year prison sentence on Monday to a former semiconductor engineer convicted of stealing trade secrets from Taiwan Semiconductor Manufacturing.
Chen Li-ming had departed TSMC to join Tokyo Electron’s Taiwan subsidiary. He exploited his professional relationships with colleagues still at TSMC to obtain, photograph, duplicate, and transfer proprietary files.
The confidential materials were utilized by Tokyo Electron to enhance its technological capabilities and strengthen its competitive position as a potential TSMC supplier.
Three engineers who remained on TSMC‘s payroll during the theft also faced prosecution. The court sentenced them to prison terms between two and six years.
A manager at Tokyo Electron received a separate conviction for instructing employees to destroy confidential TSMC documents. The manager was sentenced to 10 months in prison, with the sentence suspended for three years.
Taiwan’s application of national security statutes to this semiconductor technology theft marks a historic precedent. Government officials report a dramatic increase in corporate espionage targeting sensitive information throughout the last ten years.
Financial Penalties Target Tokyo Electron’s Taiwan Branch
The court imposed a NT$150 million fine on Tokyo Electron’s Taiwan subsidiary, equivalent to roughly $4.8 million USD. The ruling directed NT$100 million to be paid to TSMC, while the remaining NT$50 million goes to Taiwan’s state treasury.
Tokyo Electron faced corporate indictment as an entity in the proceedings.
Tokyo Electron released a statement acknowledging the seriousness of the verdict and pledging to enhance its information security protocols. The company emphasized that both investigators and the court found no evidence of systematic corporate misconduct or external dissemination of confidential information.
Tokyo Electron indicated the ruling would have no material effect on its financial operations.
Detection Method Used by TSMC
TSMC’s internal monitoring infrastructure identified unusual patterns in confidential data access last July, prompting the subsequent investigation.
A court representative confirmed that according to information supplied by TSMC, Tokyo Electron did not distribute any stolen materials to external parties. The specific terms of the settlement arrangement between the two companies remain undisclosed.
The court determined that Tokyo Electron demonstrated inadequate oversight of Chen’s activities. His internal performance reviews had highlighted his capability to “leverage existing client resources” and acquire information about customers and competitors.
TSMC produces semiconductors for industry leaders including Apple and Nvidia. The company has affirmed its commitment to pursuing legal remedies against trade-secret violations to safeguard its market position.
Tokyo Electron confirmed its full cooperation with authorities during the investigation process.
Chen, the three other convicted engineers, and Tokyo Electron’s Taiwan branch all retain the right to appeal the court’s decision.
Stock prices for both corporations showed minimal reaction following the announcement of the verdict.
