Court orders detention of 3 in alleged TSMC trade secret theft

A Taiwan court has ordered one former and two current employees of TSMC to be detained over allegations of stealing trade secrets related to the company’s advanced 2nm chip process.

The Intellectual Property and Commercial Court ruled on September 1, 2025 after prosecutors indicted Chen Li-ming, a former TSMC engineer now at Japan-based supplier Tokyo Electron, and TSMC engineers Wu Ping-chun and Ko Yi-ping.

Prosecutors allege Chen asked Wu and Ko to provide trade secrets during late 2024 and early 2025, reportedly under the pretext of helping Tokyo Electron secure more contracts from TSMC.

The court said the three deleted communication records after the alleged theft was discovered, raising concerns about evidence destruction and possible collusion.

Prosecutors are seeking prison terms ranging from seven to 14 years for the three.

🔗 Source: Focus Taiwan

🧠 Food for thought

1️⃣ Semiconductor trade secret theft follows a consistent pattern of high-stakes cases

The TSMC detention represents the latest in a series of major semiconductor trade secret cases spanning over a decade, with damage awards consistently reaching hundreds of millions.

Previous landmark cases include SMIC paying $200 million to Micron in 2009 2, Huawei facing a $1.4 billion verdict for stealing from CNEX Labs in 2019 3, and ASML receiving $223 million after former employees stole mask optimization software 4.

These cases demonstrate that semiconductor trade secrets carry extraordinarily high valuations due to the massive R&D investments required, often representing years of development work and billions in potential market advantage.

Prosecuting trade secret theft in semiconductors has become a critical legal battleground, with IP theft estimated to cost between 1-3% of global GDP annually 5.

2️⃣ Insider threats pose the greatest vulnerability to semiconductor companies

The TSMC case involving current and former employees mirrors a troubling industry pattern where the biggest IP risks come from within organizations rather than external hackers.

The Haoyang Yu case in 2019 involved a principal design engineer at Analog Devices who downloaded hundreds of confidential design files to start his own competing company 6.

Similarly, ASML’s $223 million loss came from former employees who founded a startup using stolen mask optimization software 4.