Inside the TSMC–Tokyo Electron Trade Secrets Case Over 2‑Nanometer Chip Technology

The stolen information involved technology used in TSMC’s 2‑nanometer node, a next‑generation semiconductor process critical for future high‑performance chips used in artificial intelligence systems, smartphones, and advanced computing.

According to investigators, the case emerged after TSMC’s internal security systems detected suspicious data access, triggering an investigation that eventually led to criminal charges.

Prison sentences for multiple defendants

The court ruled that several individuals participated in the scheme and imposed prison sentences on five defendants.

• Chen Li‑ming: sentenced to 10 years in prison for violating Taiwan’s National Security Act and related laws governing the theft of “national core key technologies.”
• Three additional engineers: received prison sentences ranging from two to six years.
• Another defendant: received a 10‑month sentence suspended for three years.

The ruling was considered one of the most severe punishments in Taiwan for technology espionage involving the semiconductor sector.

Why national‑security laws were used

The case was prosecuted not just as ordinary intellectual‑property theft but under Taiwan’s National Security Act, which covers the unauthorized acquisition or use of critical technologies considered essential to national interests.

It marked the first time Taiwan used security legislation to prosecute the theft of advanced chip technology, underscoring the strategic importance of the semiconductor industry to the island’s economy and geopolitical position.

TSMC is the world’s largest contract chip manufacturer and a key supplier of advanced chips used in AI systems and consumer electronics, making its proprietary processes highly sensitive.

Financial penalties for Tokyo Electron’s Taiwan unit

In addition to the prison sentences, the court also imposed penalties on Tokyo Electron Taiwan Ltd., a subsidiary of the Japanese semiconductor equipment manufacturer.

• The court fined the company NT$150 million (about US$5 million).
• Some reports also state the court ordered NT$100 million to be paid to TSMC in connection with the case, though the exact legal classification of that payment has not been fully detailed in available reporting.

Authorities linked the company to the case because individuals involved in the theft were associated with its local operations, though Tokyo Electron previously said internal reviews found no evidence of organizational involvement in leaking TSMC data.

Timeline and investigation

Public reporting reveals several key milestones in the case:

• 2025: Prosecutors indicted individuals and Tokyo Electron’s Taiwan unit over the alleged theft of TSMC’s 2‑nm technology.
• August 2025: Authorities formally charged suspects in the trade‑secrets case.
• April 2026: Taiwan’s Intellectual Property and Commercial Court delivered its ruling, issuing prison sentences and corporate fines.

However, the exact duration of the espionage activity has not been publicly confirmed in available court reporting.

Appeals and unresolved details

The court ruling is not necessarily final. Under Taiwan’s legal system, defendants may appeal decisions through higher courts, including the Supreme Court.

Public reports confirm the verdict can be appealed, but specific arguments or legal grounds for any appeals have not been fully detailed in available coverage.

Why the case matters globally

The case highlights several broader trends shaping the semiconductor industry:

• Advanced chip manufacturing processes are now treated as national‑security assets.
• Governments are increasingly willing to use security laws to prosecute industrial espionage involving chip technology.
• As competition intensifies around AI and next‑generation computing, trade‑secret protection has become a geopolitical issue as well as a corporate one.

For Taiwan—home to the world’s most advanced semiconductor manufacturing—the verdict signals that the theft of critical chip technologies will face severe criminal penalties.