Ex-worker of Tokyo Electron gets 10-year jail term in TSMC trade secrets case

By Wen-Yee Lee

NEW TAIPEI, Taiwan, April 27 (Reuters) - A Taiwan court fined the local unit of Japan's Tokyo Electron 8035.T T$150 million ($5 million) on Monday, and handed jail terms of up to 10 years to five individuals convicted in a case relating to TSMC's 2330.TW sensitive chip technology.

The ruling comes in one of Taiwan's highest profile cases involving national security charges linked to unlawfully obtaining trade secrets from TSMC, the world's biggest contract manufacturer of advanced AI chips.

Four of the defendants violated Taiwan's National Security Act by intending to use trade secrets outside Taiwan, the court said, adding that images of the information were found on the Japanese company’s cloud system.

JAIL FOR FORMER TSMC, TOKYO ELECTRON EMPLOYEES

Chen Li-ming, a former employee of both TSMC and Tokyo Electron, was sentenced to 10 years in prison, while terms ranging from two to six years were handed to three other former TSMC employees.

The court also gave a former Tokyo Electron employee a 10-month sentence, suspended for three years, for destroying evidence. The defendants could appeal against the decision, it added.

"We take the court’s finding with the utmost seriousness," Tokyo Electron said in a statement after the court faulted its Taiwan unit for having violating supervisory obligations.

TSMC, which makes chips for Nvidia NVDA.O, Apple AAPL.O and Google GOOGL.O, among many others, reiterated its policy of zero tolerance for any actions that compromise protection of trade secrets or harm its interests.

In a statement on Monday, it added that it would continue to strengthen internal management to safeguard its competitiveness.

The case dates from August 2025, when prosecutors indicted Chen of unlawfully obtaining trade secrets, along with other defendants, in a bid to help Tokyo Electron win more equipment orders from TSMC.

SECRETS RELATE TO 2-NM PROCESS TECHNOLOGY

The trade secrets relate to TSMC's 2-nanometre process technology, the industry's most advanced in terms of both density and energy efficiency, the company says on its website.

Taiwan has classified sub-14 nanometre semiconductor technologies as critical national core technologies covered by strict legal protections.

Chen was among four of the five individual defendants to plead guilty, as did the Taiwan unit of Tokyo Electron.

One other defendant, also surnamed Chen, admitted to some charges, including reproducing the information, but he did not admit to intending to use it outside Taiwan.

The court said the information reproduced without authorisation involved TSMC's A14 process, a more advanced chip technology key to maintaining the company's global leadership position.

Tokyo Electron and its Taiwan unit had reached a settlement with TSMC, the court added.

It ordered that TSMC receive T$100 million of the fine, with the rest paid to Taiwan's state treasury within one year of the ruling becoming final.

TOKYO ELECTRON SAYS NO ORGANISATIONAL INVOLVEMENT

In Monday's statement, Tokyo Electron said neither Monday's ruling nor the prior investigation found any organisational involvement by the company or its Taiwan unit, with no external leakage of the confidential information identified.

The company said it had agreed in discussions with TSMC on enhanced measures to protect trade secrets, and the case had no impact on its financial results.

In December, Taiwan prosecutors said they had charged the Tokyo Electron unit with violating the National Security Act and the Trade Secrets Act after Chen was indicted in August for alleged theft of the trade secrets.

Shares of TSMC closed up 3.7%.

($1=T$31.4110)