Tokyo Electron charged in Taiwan over alleged TSMC secrets theft

Taiwanese prosecutors have charged Tokyo Electron for allegedly failing to prevent the theft of trade secrets from Taiwan Semiconductor Manufacturing Co. (TSMC), escalating a dispute between two major players in the chip industry.

Tokyo Electron, a Japanese semiconductor equipment supplier, faces several counts related to business secret and national security laws, with prosecutors seeking a fine.

Authorities did not accuse Tokyo Electron of using TSMC’s proprietary information.

The indictment follows the August charging of three individuals, including a former TSMC and Tokyo Electron employee, for allegedly conspiring to steal intellectual property.

Prosecutors allege the former employee attempted to access TSMC’s confidential data and persuaded ex-colleagues to share technology.

Tokyo Electron is reviewing the details and has dismissed an employee in Taiwan connected to the case.

Taiwan is seeking jail terms for the individuals charged, citing national security concerns.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

Penalties can reach up to 12 years under Taiwan’s National Security Act when ‘national core key technologies’ are implicated

Tokyo Electron faces charges under Taiwan’s Trade Secrets Act and the stricter National Security Act. The latter sets 5 to 12 years for misusing core technologies, compared with 1 to 10 years under the Trade Secrets Act 1.
The National Security Act targets items on a government list that is expected to include semiconductor and integrated circuit (IC) design technologies. Prosecutors stepped up action after engineers moved to jobs in China 1.
The company risks a fine, while three employees could face prison. Taiwan is pressing criminal cases beyond civil remedies such as damages, injunctive relief (court orders to stop misuse), and destruction orders 2.
The matter fits Taiwan’s 2022 amendment to guard “national core key technologies” 2.

Compliance implications for semiconductor equipment vendors operating in Taiwan

Other equipment suppliers with Taiwan operations could face similar exposure if prosecutors decide confidentiality steps fell short 2.
Taiwan law requires reasonable safeguards for a trade secret. Examples include non-disclosure agreements and document labels. Companies also use restricted access controls and information tracking systems, or regular employee training 2.
Prosecutors can charge a company over staff misconduct even when no corporate use occurred. Manage insider access at customer sites 2.
Taiwan’s Trade Secrets Act gives six months to file a criminal complaint under article 13-1 after identifying the offender, so firms must act fast once potential theft comes to light 2.