Background
TSMC, the world’s largest contract chipmaker, discovered in mid-2024 that confidential process technology for its next-generation 2-nanometer chip manufacturing had been stolen by a former employee who had moved to Tokyo Electron Taiwan, a subsidiary of the Japanese semiconductor equipment giant. The stolen information encompassed etching equipment specifications and process parameters for TSMC’s 2nm node, as well as manufacturing processes for nodes at and below 14nm—technologies classified as “national core critical technologies” under Taiwan’s National Security Act.
The scheme was straightforward but brazen. Chen Li-ming, a former TSMC yield engineer, joined Tokyo Electron Taiwan’s marketing division after leaving TSMC. Leveraging his former colleagues, he repeatedly asked sitting TSMC engineers to pull up process data on their company-issued laptops, photograph the screens with personal mobile phones, and send him the images. The stolen materials were uploaded to Tokyo Electron’s cloud storage system, where investigators later discovered them. Chen used the information to help Tokyo Electron improve its etching equipment and position the company to win more advanced-process equipment contracts with TSMC itself.
The Court’s Holding
The Taiwan Intellectual Property and Commercial Court convicted all defendants and imposed severe sentences in what prosecutors called a landmark case for Taiwan’s semiconductor IP protection regime.
Chen Li-ming (former TSMC engineer, ringleader) received 10 years imprisonment—the court found his actions “jeopardized the competitiveness and economic security of Taiwan and its chipmaking industry,” even though his personal motivation was improving his work performance at Tokyo Electron.
Chen Wei-chieh (sitting TSMC engineer) received 6 years. He was added to the case in January 2026 after investigators found additional 14nm secrets on Tokyo Electron’s cloud storage. The court noted he had replaced his phone and computer after learning of the investigation.
Wu Ping-chun and Ko Yi-ping (sitting TSMC engineers who photographed screen data) received 3 years and 2 years respectively.
Tokyo Electron Taiwan Co., Ltd. was fined NT$150 million (approximately US$4.8 million) with a 3-year suspended sentence, conditioned on paying NT$100 million in compensation to TSMC and NT$50 million to the public treasury within one year. The court found the company failed to exercise adequate supervision over Chen Li-ming and lacked sufficient preventive measures. This is the first corporate conviction under Taiwan’s National Security Act.
Key Takeaways
- First corporate criminal conviction under Taiwan’s National Security Act: The conviction of Tokyo Electron Taiwan sets a precedent that foreign-owned companies operating in Taiwan can face criminal liability for employees’ trade secret theft, even without direct organizational involvement in the theft.
- Semiconductor IP as national security: Taiwan’s classification of advanced chip manufacturing processes as “national core critical technologies” elevates trade secret theft from a commercial offense to a national security crime, carrying sentences up to 12 years.
- The photograph-from-screen method: Despite TSMC’s robust digital security measures, the thieves circumvented technical controls by simply photographing on-screen data with personal mobile phones—a reminder that the most sophisticated IP protection systems can be defeated by the simplest analog methods.
- Equipment makers face new compliance risk: The ruling signals that semiconductor equipment suppliers must implement rigorous controls on how employees handle customer IP, particularly when employees have prior relationships with the customer’s workforce.
Why It Matters
This case arrives at a moment when semiconductor trade secrets have become a matter of geopolitical significance. Taiwan produces over 90% of the world’s most advanced chips, and TSMC’s process technology is among the most valuable trade secrets on earth. The 10-year sentence for the ringleader and the first-ever corporate conviction under the National Security Act send an unmistakable signal: Taiwan will treat theft of chip manufacturing secrets as a threat to national security, not merely a commercial dispute. For multinational equipment suppliers and their employees, the case demands a fundamental reassessment of IP compliance programs in Taiwan’s semiconductor ecosystem. Tokyo Electron stated it has reached a settlement with TSMC and does not expect the ruling to impact operations, but the precedent extends far beyond this single case.