(Dec 2): Taiwanese prosecutors charged Tokyo Electron Ltd for failing to prevent staff from allegedly stealing Taiwan Semiconductor Manufacturing Co (TSMC) trade secrets, escalating a dispute involving two Asian linchpins of a chip industry increasingly vital to national and economic security.
Prosecutors indicted the Japanese company on several counts of violating business secret and national security laws, they said in a statement on Tuesday. They’re asking a local court to rule in favour of their request for Tokyo Electron pay a fine for failing in its duty to prevent the alleged theft.
“Tokyo Electron has not done its best to carry out preventive measures,” prosecutors said. They did not accuse the Japanese firm of utilising TSMC’s proprietary data.
The indictment follows the August charging of three people — including a former TSMC and Tokyo Electron employee — for allegedly conspiring to steal intellectual property from Taiwan’s largest and most important company.
TSMC, chipmaker to Apple Inc and Nvidia Corp, reported the alleged theft to the authorities this year, triggering a probe that’s cast a spotlight on the sensitive nature of chipmaking technology.
Taiwan makes the bulk of the world’s most advanced semiconductors and its companies have regularly been targeted for their intellectual property by entities with ties to Beijing, which is pushing hard to develop its own chip capabilities.
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Taiwan in 2025 has been flexing the economic clout amassed from a growing dominance of chipmaking. In September, the island threatened to choke off supply of the components — used in most electronics including electric vehicles (EVs) and phones — to South Africa. Last month, prosecutors searched the homes of a former TSMC executive who joined Intel Corp, after the Taiwanese firm accused him of potentially transferring intellectual property. The US company has rejected those allegations.
Tokyo Electron said it’s still trying to verify the details of the announcement from the Taiwanese authorities. TSMC didn’t immediately respond to a request for comment outside normal business hours.
The dispute has also put lower-profile Tokyo Electron — a maker of equipment for TSMC and other manufacturers — under unusual scrutiny.
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Taiwan is seeking jail terms for the individuals indicted, citing a threat to the island’s national security. Among those was the former employee, identified by the surname Chen, who allegedly tried to gain access to TSMC’s confidential data while at Tokyo Electron. According to Taiwanese prosecutors, the ex-employee convinced former TSMC co-workers to share proprietary technology.
Tokyo Electron previously said it had fired an employee at a Taiwan unit in connection with the case, and is cooperating with the investigation. It’s stressed a firm policy against wrongdoing by its staff and reiterated it had seen no evidence that sensitive data was leaked to a third party.
The case had previously raised questions about whether Tokyo Electron would have any motivation to steal TSMC trade secrets.
Alongside Applied Materials Inc and Lam Research Corp, Tokyo Electron plays a crucial supporting role to chipmakers including TSMC, Samsung Electronics Co and Intel, making machines that coat, etch, process and clean silicon wafers to create semiconductors.
Taiwan prosecutors had accused Chen of trying to steal technology to help improve the Japanese company’s etching equipment, and win TSMC’s certification for use in cutting-edge 2-nanometre chipmaking processes. They also said the three people who were indicted intended to use TSMC’s proprietary technology overseas.
The Taiwanese company has said it will continue to strengthen its monitoring systems and will work closely with regulatory authorities as necessary to protect its competitiveness.
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