Taiwan prosecutors announced on December 2 2025 that they had charged the Taiwan unit of Tokyo Electron with violations of the National Security Act and the Trade Secrets Act. The charges stem from an August 2025 indictment of three individuals, including a former TSMC engineer who had moved to Tokyo Electron’s Taiwan subsidiary, for stealing advanced 2‑nanometer chip technology and transferring it to a competitor. The Taiwan unit is accused of failing to supervise the employee and of not taking all reasonable steps to prevent the theft.
The indictment cites that the stolen trade secrets involve proprietary process data for TSMC’s 2‑nanometer technology, a critical component of the company’s next‑generation manufacturing line. Tokyo Electron’s Taiwan unit faces potential fines of up to NT$120 million (about US$3.8 million). The company has stated that it found no evidence of organizational involvement, has terminated the employee in question, and is cooperating with the investigation.
TSMC has long maintained a zero‑tolerance policy for trade‑secret protection and has established a Supply Chain Security Association to educate suppliers on information‑protection best practices. The case highlights a potential gap in oversight when employees move between competitors, a risk that TSMC is actively addressing through tighter vendor‑management protocols and enhanced monitoring of personnel transfers.
For Tokyo Electron, the regulatory action carries both financial and reputational implications. A fine of up to NT$120 million is significant for a supplier whose revenue is in the billions, and the public nature of the charges could erode confidence among TSMC’s customers and other partners. The incident may prompt TSMC to reassess its supplier relationships and could influence future procurement decisions, especially for equipment that supports advanced process nodes.
The broader semiconductor industry is experiencing a surge in intellectual‑property theft, driven by the high value of advanced process knowledge and the geopolitical importance of chip technology. National‑security legislation is increasingly applied to such cases, underscoring the strategic stakes for companies that supply critical components to leading foundries. This case serves as a cautionary example for the entire ecosystem, illustrating how a single employee’s actions can trigger regulatory scrutiny and potentially disrupt supply‑chain stability.
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