Former TSMC Engineer Gets 10-Year Sentence for Stealing Chip Technology Secrets

TLDR

• Former TSMC engineer Chen Li-ming received a 10-year prison sentence from a Taiwanese court for stealing semiconductor trade secrets
• Three additional engineers were sentenced to prison terms ranging from two to six years
• Tokyo Electron’s Taiwan division faces a NT$150 million fine (approximately $4.8 million USD)
• Taiwan applied national security legislation to a chip technology theft case for the first time
• The investigation began after TSMC’s security systems identified suspicious data access patterns in July

A Taiwanese Intellectual Property and Commercial Court issued a 10-year prison sentence on Monday to a former semiconductor engineer convicted of stealing proprietary trade secrets from Taiwan Semiconductor Manufacturing.

Chen Li-ming had been employed at TSMC before transitioning to a position at Tokyo Electron’s Taiwan division. He exploited relationships with colleagues still working at his former employer to obtain, photograph, duplicate, and transfer confidential documents.

The proprietary information was utilized by Tokyo Electron to enhance its technological capabilities and strengthen its competitive position when submitting proposals as a TSMC vendor.

Three additional engineers who remained on TSMC‘s payroll during the theft also faced criminal prosecution. The court handed them prison sentences between two and six years.

A manager at Tokyo Electron received a separate conviction for directing the destruction of confidential TSMC documents. That individual was given a 10-month sentence with a three-year suspension.

This marks Taiwan’s inaugural use of national security laws in prosecuting the theft of critical semiconductor technology. Government officials note that corporate espionage targeting sensitive technical information has increased dramatically in the past ten years.

Tokyo Electron Faces Multi-Million Dollar Fine and Payment Order

The Taiwan branch of Tokyo Electron was ordered to pay NT$150 million in penalties, equivalent to roughly $4.8 million USD. The court directed NT$100 million of this sum be paid directly to TSMC, while the remaining NT$50 million will go to Taiwan’s state treasury.

The company faced indictment as a corporate defendant in the proceedings.

Tokyo Electron released a statement saying it views the court’s decision with gravity and will enhance its information security protocols. The firm emphasized that neither investigators nor the court determined any organizational misconduct or external disclosure of confidential materials occurred.

Tokyo Electron further stated the verdict is not anticipated to affect its financial operations.

Detection of the Security Breach

TSMC’s internal security infrastructure identified anomalous access patterns to protected data in July of last year, initiating the criminal investigation.

A court representative verified that according to evidence presented by TSMC, Tokyo Electron never disseminated any of the stolen proprietary materials to outside parties. The precise terms of the settlement reached between the two corporations remain under seal.

The court determined that Tokyo Electron failed to adequately monitor Chen’s activities. His internal performance reviews had highlighted his capacity to “exploit existing client relationships” and acquire intelligence about customers and competitors.

TSMC produces semiconductors for leading technology firms including Apple and Nvidia. The company has pledged to pursue legal remedies against trade secret violations to safeguard its market position.

Tokyo Electron stated it provided full cooperation to law enforcement throughout the inquiry.

All convicted parties, including Tokyo Electron’s Taiwan operations, retain the option to appeal the court’s judgment.

Stock prices for both corporations showed minimal movement in response to the verdict.

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