Key Takeaways
- Ex-TSMC engineer Chen Li-ming received a 10-year prison sentence for misappropriating semiconductor trade secrets
- The court imposed prison terms ranging from two to six years on three additional engineers
- Tokyo Electron’s Taiwanese operations face a NT$150 million penalty (approximately $4.8 million)
- Taiwan deployed national security legislation for the first time to address semiconductor intellectual property theft
- The breach was uncovered when TSMC’s security protocols identified suspicious data access patterns in July
A Taiwanese Intellectual Property and Commercial Court issued a decade-long prison sentence this Monday to a former Taiwan Semiconductor Manufacturing Company employee convicted of stealing proprietary chip technology.
Chen Li-ming, who previously held an engineering position at TSMC before transitioning to Tokyo Electron’s Taiwanese division, exploited relationships with his former colleagues to gain unauthorized access to sensitive information. He systematically photographed, duplicated, and transmitted classified documents.
The misappropriated data enabled Tokyo Electron to enhance its technological capabilities and strengthen its competitive position when bidding for TSMC supplier contracts.
Three current TSMC engineers who participated in the scheme also faced judicial consequences, receiving prison sentences between two and six years.
Additionally, a Tokyo Electron supervisor was found guilty of instructing subordinates to destroy confidential TSMC materials. This individual received a 10-month sentence with a three-year suspension.
Taiwan’s judicial system has now established a precedent by invoking national security statutes in a semiconductor intellectual property case. Government authorities indicate that corporate espionage targeting sensitive technological data has intensified significantly over the last ten years.
Tokyo Electron Faces Substantial Financial Penalties and Compensation Order
The court levied a NT$150 million fine against Tokyo Electron’s Taiwan operations, equivalent to approximately $4.8 million in U.S. currency. Of this total, NT$100 million must be paid directly to TSMC as compensation, while the remaining NT$50 million flows to Taiwan’s national treasury.
The corporation itself faced indictment as a legal entity in these proceedings.
In its official response, Tokyo Electron acknowledged the gravity of the court’s decision and pledged to enhance its information security protocols. The company emphasized that neither the investigation nor the judicial ruling identified any systematic corporate misconduct or external dissemination of confidential information.
Tokyo Electron further stated that it anticipates no material financial consequences from the verdict on its operations.
TSMC’s Detection Methods Revealed
TSMC’s sophisticated internal monitoring infrastructure identified anomalous access patterns to protected data last July, prompting the subsequent inquiry.
A court representative verified that evidence submitted by TSMC demonstrated Tokyo Electron never distributed the stolen information beyond its organization. The precise terms of the settlement arrangement between the two semiconductor companies remain undisclosed.
Judicial findings indicated that Tokyo Electron demonstrated inadequate oversight of Chen’s activities. His internal performance reviews had previously highlighted his capacity to “exploit established client relationships” and acquire intelligence about customers and competitors.
TSMC produces semiconductors for technology giants such as Apple and Nvidia. The company has committed to pursuing aggressive legal measures against trade secret violations to safeguard its market position.
Tokyo Electron confirmed its full cooperation with law enforcement throughout the investigative process.
Both Tokyo Electron’s Taiwan subsidiary and all individual defendants retain the legal right to challenge the verdict through appeals.
Stock prices for both corporations showed minimal reaction to the announcement of the ruling.
