TSMC 2nm Leak Case Retrial! Tokyo Electron Prosecuted, Facing NT$120 Million Fine

TSMC Reported Suspected Theft of 2nm Process Technology This Year, Triggering Large-Scale Investigation in Taiwan. The Case Expanded from Individual Involvement to Management Lapses at Tokyo Electron. Taiwan Prosecutors Recently Announced Indictment of Tokyo Electron’s Taiwan Subsidiary and Requested a NT$120 Million Fine.

TSMC Reports Confidential Data Leak, Prosecutors Launch In-Depth Investigation

This year, TSMC reported a suspected leak of its 2nm technology to the government, triggering a formal investigation by Taiwan’s prosecutors. The central figure in the case is an engineer surnamed Chen, who previously worked for TSMC before moving to Tokyo Electron’s Taiwan subsidiary. Investigations found that Chen allegedly leveraged his connections at TSMC to request highly sensitive 2nm process data from former colleagues.

The 2nm process is one of TSMC’s most advanced technologies, representing the forefront of global semiconductor manufacturing. This process technology involves core trade secrets related to wafer manufacturing, including equipment parameters, process recipes, yield optimization methods, and other critical information. If leaked, such data could allow competitors to close the technology gap and threaten Taiwan’s leading position in the global semiconductor supply chain.

Because the requested content involved core wafer process secrets, investigators expanded the probe to clarify whether cross-border usage and security risks were involved. As the world’s largest foundry, TSMC’s technological edge is the core competitive strength of Taiwan’s semiconductor industry. Any leak of advanced process technology could pose a significant threat to Taiwan’s economic security.

Prosecutors realized the gravity of the case early in their investigation. The scope and specificity of the data Chen sought indicated a deep understanding of TSMC’s 2nm process and knowledge of which information was most valuable. This targeted data acquisition raised serious concerns about his motives.

Assisting Japanese Firm’s Equipment Certification Escalates Security Risks

In August, prosecutors officially indicted three suspects. Investigations revealed that while working at both TSMC and Tokyo Electron, Chen repeatedly attempted to obtain advanced process information. He allegedly intended to use the data to help Tokyo Electron improve its etching equipment, with the goal of passing TSMC’s 2nm process certification.

This discovery shifted the nature of the case from a simple act of individual theft to possible corporate-organized technology theft. Tokyo Electron is a leading global semiconductor equipment manufacturer, and its etching tools are critical to wafer production. If the company were to gain access to TSMC’s process parameters, it could theoretically optimize its equipment performance to more easily pass TSMC’s stringent certification requirements.

TSMC’s supplier equipment certification process is extremely rigorous, often requiring months or even years of testing and optimization. If equipment vendors could obtain process parameters in advance, certification time would be significantly shortened and the pass rate increased. This unfair competitive advantage would not only harm TSMC’s business interests but also undermine fair competition in the semiconductor equipment industry.

Three Key Factors in the Case Escalation

Cross-Border Technology Transfer Risk: The data involved could be used overseas, threatening Taiwan’s technological edge.

Supplier Certification Fraud: Suspected use of confidential information to gain unfair competitive advantage.

Security-Level Threat: Leakage of advanced process technology could impact Taiwan’s security.

Prosecutors also pointed out that the three suspects intended to take TSMC’s proprietary technology abroad, elevating the case from simple theft to a matter of national security. Taiwan’s laws clearly stipulate that any leak of core national technologies may constitute a security crime. Semiconductor manufacturing technology is considered a core national interest, leading prosecutors to indict those involved.

Tokyo Electron Indicted for Negligence, Fined NT$120 Million

By the end of 2025, the case reached a critical stage. Taiwan prosecutors formally indicted Tokyo Electron’s Taiwan subsidiary, citing insufficient control over employee conduct and inadequate protection of trade secrets, failing to effectively prevent the engineer from stealing technology. This is the first time in Taiwan’s legal history that such a major lawsuit has been filed against a foreign semiconductor equipment company.

Prosecutors emphasized that although there was no evidence that Tokyo Electron used or benefited from TSMC’s secrets, they were still seeking a NT$120 million fine for “failure to fulfill preventive obligations.” The core legal argument is: even if the company was not directly involved or did not benefit from the theft, it is still liable if it failed to establish effective internal controls and adequately supervise employee behavior.

The NT$120 million penalty is considered severe in Taiwan’s trade secrets cases. The calculation is based on the commercial value of TSMC’s 2nm technology, the scope and sensitivity of the leaked data, potential damage to Taiwan’s semiconductor industry, and the deterrent effect on other companies. Prosecutors hope this heavy fine will send a clear message to all foreign enterprises operating in Taiwan: strict compliance with Taiwan’s trade secrets laws is mandatory.

How Tokyo Electron handled the incident was also a key point in the prosecution’s assessment. Although the company immediately dismissed the implicated employee upon learning of the case, prosecutors found these remedial actions insufficient to make up for deficiencies in preventive mechanisms. Companies should establish comprehensive trade secret protection systems during recruitment, training, and daily management, rather than waiting to act until after incidents occur.

Responses from Both Sides and Industry Warnings

Tokyo Electron responded by stating that the implicated employees had been dismissed, that the company is thoroughly verifying related details and fully cooperating with the investigation, and reiterated that there was no evidence of data being leaked to third parties. A company spokesperson emphasized that Tokyo Electron has always valued intellectual property protection and business ethics, regrets the misconduct of its employees, and has taken steps to strengthen internal management.

TSMC also released a statement emphasizing that it will continue to strengthen internal controls and cooperate with authorities to ensure its competitive advantage remains unaffected by external interference. TSMC stated that it has launched a comprehensive internal review, examining all aspects including employee exit management, data access controls, and supplier management to prevent similar incidents from recurring.

This case has had a profound impact on Taiwan’s semiconductor industry. First, it exposed the risk of technology leaks resulting from talent mobility. The semiconductor industry is highly dependent on skilled professionals, but the movement of talent between companies can also become a channel for trade secret leakage. Second, it highlighted the challenges of supplier management. Collaboration between TSMC and its equipment vendors involves extensive technology exchange, making protection of confidential information a new challenge.