Tokyo Electron Faces Charges in TSMC Trade Secrets Scandal - Latest Semiconductor Industry Shakeup
Another chipmaking giant stumbles into legal crosshairs.
Tokyo Electron—the semiconductor equipment powerhouse—just joined the growing list of companies facing charges over alleged TSMC trade secret violations. The development sends fresh tremors through an industry already grappling with geopolitical tensions and supply chain fragility.
The Accusation: What We Know
Details remain under wraps, but authorities allege improper handling of proprietary TSMC technology. This isn't isolated—it's part of a widening pattern where cutting-edge chip manufacturing know-how becomes contested territory. The legal move highlights the brutal competitiveness defining the race for semiconductor supremacy.
Why This Matters Beyond the Courtroom
TSMC's secrets aren't just formulas—they're the foundation of global tech infrastructure. Every smartphone, AI server, and data center relies on this intellectual property. When that foundation gets chipped away, the entire ecosystem feels the vibration. Investors are watching: any threat to TSMC's technological moat threatens the valuation of everything downstream.
The Ripple Effect
Expect tightened security protocols across the sector. Supply chain audits will intensify. Partnerships will face new scrutiny. For an industry built on precision, even perceived instability carries a cost—measured in delayed projects, spooked clients, and yes, stock price fluctuations. Because nothing makes capital flee faster than legal uncertainty wrapped in a scandal headline.
The takeaway? In the high-stakes semiconductor game, the most valuable currency isn't silicon—it's secrets. And as today's charges prove, the market for those secrets remains dangerously, profitably opaque. Just ask the lawyers and short-sellers now licking their chops.
Tokyo Electron’s Taiwan unit sees legal trouble
The charges against the department were announced on Tuesday, December 2, 2025, and are being pursued under both Taiwan’s Trade Secrets Act and the powerful National Security Act.
This case is the first in which a corporation in Taiwan will be indicted under the National Security Act for the alleged theft of “national Core critical technology trade secrets.”
The prosecutors are seeking a fine of up to NT$120 million (around $3.8 million) against the Tokyo Electron unit if it is convicted.
The main accusation is that the company allegedly failed to prevent the crime. Prosecutors pointed out that Tokyo Electron has internal rules, and still the unit “lacked evidence of concrete preventive or managerial measures” to stop the theft. Therefore, they argue the company must face corporate criminal liability.
In August 2025, a former TSMC employee, surname Chen, who later worked for the Tokyo Electron Taiwan unit, and two current TSMC engineers were indicted. Chen is accused of using his connections to convince his former colleagues to share confidential information about TSMC’s 2-nanometer (2nm) chip process technology.
The motivation for the theft was reportedly to help Tokyo Electron improve its etching equipment and secure valuable contracts for TSMC’s most advanced manufacturing line.
Tokyo Electron has stated it is cooperating with the investigation and also previously denied any organizational involvement in the alleged theft, saying the company does not tolerate staff misconduct.
TSMC’s legal battles
TSMC has taken steps to protect its intellectual property recently, including filing a lawsuit against its former senior vice president, Wei-Jen Lo, who retired in July 2025 and joined the rival company Intel Corp. as an executive vice president.
TSMC’s lawsuit, which was filed in November, alleges that there is a “high probability” that Lo will “use, leak, disclose, deliver, or transfer TSMC’s trade secrets and confidential information to Intel,” violating his non-compete agreement and the Trade Secrets Act.
Lo had stated he WOULD join an “academic institution” upon departure, but that turned out to be false.
Taiwanese prosecutors have opened a criminal investigation into Lo’s case, seizing computers and other digital evidence from his homes and suggesting he is suspected of violating the National Security Act.
Intel’s CEO, Lip-Bu Tan, dismissed the allegations as speculation and stated that Intel “respects intellectual property rights” and has strict policies to prevent the use of third-party confidential information.
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