Tokyo Electron said it has dismissed an employee from its Taipei office following the arrest of six people accused of stealing trade secrets from Taiwan Semiconductor Manufacturing Co (TSMC).

The Japanese chip gear maker, a major supplier of semiconductor equipment to TSMC, said it is cooperating with the ongoing investigation.

Taiwanese prosecutors arrested the six suspects this week, including a person local media identified as a former Tokyo Electron employee.

Authorities have not released further details about the case or whether any confidential data was transferred to outside parties.

TSMC manufactures chips for major clients, including Nvidia and Apple.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Insider threats from current employees pose the greatest risk to semiconductor IP

The TSMC case follows a pattern where employees steal trade secrets while still having authorized access to sensitive systems.

A similar 2019 case involved Haoyang Yu, who downloaded hundreds of confidential files from Analog Devices while employed there, then marketed products using the stolen designs after leaving the company1.

The current TSMC investigation involves both current and former employees, with authorities discovering over 400 photos of fabrication steps related to the company’s advanced 2nm technology2.

This insider access makes detection particularly challenging, as employees can gradually extract information over time without triggering typical cybersecurity alarms.

The semiconductor industry’s reliance on highly specialized knowledge means that a small number of employees often have access to extremely valuable trade secrets, creating concentrated risk points that are difficult to monitor effectively.

2️⃣ Trade secret theft carries massive financial penalties that reflect strategic technology value

The financial stakes in semiconductor IP cases have grown enormous, with a California jury awarding Dutch equipment maker ASML $223 million in damages against XTAL for trade secret misappropriation in 20183.

Tokyo Electron’s vulnerability in this case extends beyond legal liability, as the company generates over 47% of its revenue in China, making it heavily dependent on maintaining access to that market4.