TLDR
- Former TSMC engineer Chen Li-ming received a 10-year prison sentence for misappropriating semiconductor trade secrets
- Three additional engineers were sentenced to prison terms ranging from two to six years
- Tokyo Electron’s Taiwan subsidiary faces a NT$150 million fine (approximately $4.8 million USD)
- Taiwan’s national security legislation applied to chip technology theft for the first time
- Internal security protocols at TSMC flagged suspicious data access in July, initiating the probe
A former engineer who misappropriated proprietary information from Taiwan Semiconductor Manufacturing received a 10-year prison sentence from Taiwan’s Intellectual Property and Commercial Court this Monday.
Chen Li-ming had previously been employed at TSMC before transitioning to Tokyo Electron’s Taiwan operations. He exploited his professional relationships with current TSMC employees to obtain, photograph, duplicate, and transmit proprietary documents.
The misappropriated information was utilized to enhance Tokyo Electron’s technological capabilities and strengthen its competitive position as a potential TSMC vendor.
Three current TSMC employees who assisted in the scheme also faced criminal penalties. Their sentences varied between two and six years of imprisonment.
A separate conviction targeted a Tokyo Electron supervisor who directed the destruction of confidential TSMC documentation. This individual received a 10-month sentence with a three-year suspension.
This case marks a historic precedent as Taiwan’s first application of national security statutes to semiconductor technology theft. Government authorities indicate that corporate espionage involving sensitive technological information has increased dramatically in recent years.
Tokyo Electron Faces Financial Penalties and TSMC Restitution
The court imposed a NT$150 million penalty on Tokyo Electron’s Taiwan operations, equivalent to roughly $4.8 million USD. Judges ordered NT$100 million transferred directly to TSMC as compensation, while the remaining NT$50 million goes to government coffers.
The corporate entity itself faced indictment in these proceedings.
Tokyo Electron released a statement acknowledging the verdict’s gravity and pledging enhanced information security protocols. The company emphasized that neither investigative authorities nor judicial officials discovered systematic corporate misconduct or external data breaches attributable to the organization.
The firm stated it anticipates no material financial consequences from the ruling.
Detection Through TSMC’s Security Infrastructure
TSMC’s internal monitoring systems identified anomalous access patterns to protected data last July, prompting the formal investigation.
A judicial spokesperson confirmed that evidence presented by TSMC indicated Tokyo Electron prevented external dissemination of the stolen materials. The precise terms of settlement between the two corporations remain undisclosed.
Judges determined that Tokyo Electron demonstrated inadequate oversight of Chen’s activities. His internal performance reviews had highlighted his capacity to “leverage existing client resources” and gather intelligence on customers and competitors.
TSMC produces semiconductors for industry leaders including Apple and Nvidia. The manufacturer has affirmed its commitment to pursuing legal remedies against intellectual property theft to safeguard its market position.
Tokyo Electron confirmed its full cooperation with law enforcement throughout the proceedings.
All parties convicted, including Tokyo Electron’s Taiwan subsidiary, retain appeal rights.
Stock prices for both corporations showed minimal reaction following the announcement.
