Background
Taiwan Semiconductor Manufacturing Company (TSMC) is the world’s most valuable chipmaker and the sole manufacturer capable of producing the most advanced semiconductors used in AI chips, smartphones, and defense systems. Its 2-nanometer process technology, currently under development, represents the next frontier of semiconductor manufacturing — a technology worth billions and considered critical to Taiwan’s national security.
Between the second half of 2023 and the first half of 2024, Chen Li-ming, a former TSMC engineer who had moved to Tokyo Electron (a major Japanese semiconductor equipment supplier), repeatedly solicited current TSMC engineers to provide him with trade secrets related to TSMC’s advanced manufacturing processes. Chen sought key technologies related to IC manufacturing for processes below 14 nanometers, including proprietary data about gas, chemical, and equipment technologies. His goal was to help Tokyo Electron secure more advanced process equipment contracts at TSMC — essentially using stolen knowledge about the customer’s needs to gain a competitive advantage in selling equipment back to that same customer.
Taiwan prosecutors charged the defendants under both the Trade Secrets Act (Articles 13-1 and 13-2) and the National Security Act (Article 8(2)), which was amended in 2022 to specifically protect “national core critical technologies” — a category that includes advanced semiconductor manufacturing processes.
The Court’s Holding
The Intellectual Property and Commercial Court convicted all four individual defendants. Chen Li-ming, identified as the ringleader who actively recruited current TSMC engineers to steal secrets, received the harshest sentence: 10 years in prison. Chen Wei-chieh, another participant, was sentenced to 6 years. Two TSMC engineers who supplied the secrets — Wu Ping-chun and Ko Yi-ping — received 3 and 2 years respectively. A fifth defendant, Lu Yi-yin, received a 10-month suspended sentence and a fine of NT$1 million (approximately US$31,000).
Tokyo Electron itself was fined NT$150 million (approximately US$4.7 million) and given a 3-year suspended sentence as a corporate entity. The company was also ordered to pay NT$100 million to TSMC in restitution and NT$50 million to the public treasury within one year of the judgment becoming final. This marks the first time a corporate entity has been convicted under Taiwan’s National Security Act for involvement in core technology theft.
Tokyo Electron has stated publicly that “no confidential data was leaked” and that “discussions are underway” regarding the ruling, suggesting an appeal is likely.
Key Takeaways
- First corporate conviction under Taiwan’s National Security Act: This ruling establishes that foreign companies operating in Taiwan can face criminal liability — not just civil damages — when their employees steal core technologies classified as national security assets. The precedent will be closely watched by every multinational operating in Taiwan’s semiconductor ecosystem.
- Severe individual sentences signal deterrence: The 10-year prison sentence for Chen Li-ming is among the harshest ever imposed in a trade secret case globally. It sends an unmistakable message that Taiwan will aggressively prosecute technology theft involving its crown jewel semiconductor industry.
- Supplier-customer relationships are a vector for theft: The scheme exploited the trusted relationship between TSMC and its equipment supplier. Companies with deep customer relationships — particularly in the semiconductor supply chain — must implement rigorous controls to ensure employees do not exploit their access to customer facilities and information.
- National security framing elevates the stakes: By prosecuting under the National Security Act rather than solely the Trade Secrets Act, Taiwan positioned advanced semiconductor technology as a strategic national asset. This mirrors trends in the United States, where the CHIPS Act and export controls similarly treat advanced chip technology as a matter of national security.
Why It Matters
This case sits at the intersection of trade secret law, national security, and the global semiconductor race. As countries compete for supremacy in advanced chip manufacturing, the legal frameworks protecting proprietary technology are becoming more aggressive. Taiwan’s willingness to impose prison sentences of up to 10 years and to hold a major Japanese corporation criminally liable sends a powerful signal to the global semiconductor industry: the era of treating trade secret theft as primarily a civil matter is over, at least where core national technologies are involved.
For multinational companies operating in Taiwan’s semiconductor ecosystem — equipment suppliers, materials providers, design firms, and foundries — the ruling demands a reassessment of compliance programs, employee monitoring, and information access controls. The case also raises questions about how Tokyo Electron will manage the fallout from a criminal conviction in one of its most important markets, and whether the ruling will affect its commercial relationship with TSMC going forward.