Taiwan jails ex-TSMC engineer 10 years over leak of advanced 2nm chip technology secrets

A Taiwanese court has sentenced a former engineer at Taiwan Semiconductor Manufacturing Co. (TSMC) to 10 years in prison for leaking trade secrets linked to the company’s advanced 2-nanometre (nm) chip technology.

The ruling was delivered by Taiwan’s Intellectual Property and Commercial Court, which found Chen Li-ming guilty of violating the National Security Act and the Trade Secrets Act.

The case centres on the unauthorised acquisition and disclosure of proprietary semiconductor data to benefit his subsequent employer, Tokyo Electron.

According to prosecutors, Chen had previously worked in TSMC’s yield department at Fab 12 before joining Tokyo Electron’s marketing division.

Between the second half of 2023 and the first half of 2024, he allegedly sought to assist the Japanese equipment supplier in securing additional contracts with TSMC for its most advanced manufacturing processes.

Investigators said Chen repeatedly approached current TSMC engineers Wu Ping-jun and Ko I-ping, requesting confidential technical information.

The materials, which included key process technologies and trade secrets, were reportedly photographed and reproduced. Prosecutors said the information was used to improve the performance of etching equipment in an effort to meet the requirements for TSMC’s 2 nm production lines.

The court sentenced Wu and Ko to three years and two years in prison respectively. Another TSMC engineer, Chen Wei-chieh, received a six-year sentence for his involvement in the unauthorised acquisition of trade secrets.

A Tokyo Electron employee, Lu I-yin, was sentenced to 10 months in prison, suspended for three years, and ordered to pay NT$1 million (approximately US$31,800) to the public treasury.

The court also imposed financial penalties on Tokyo Electron. The company was fined NT$150 million (approximately US$4.77 million), with enforcement suspended for three years. It was further ordered to pay NT$100 million (about US$3.18 million) in compensation to TSMC and NT$50 million (about US$1.59 million) to the public treasury.

Prosecutors determined that Tokyo Electron bore supervisory responsibility for the actions of its employee and cited deficiencies in its internal controls. The firm was indicted on multiple counts under the National Security Act.

Further investigation revealed that Tokyo Electron’s cloud storage systems still contained classified TSMC technologies, including integrated circuit manufacturing processes for nodes below 14 nm, as well as related materials such as gases, chemicals and equipment specifications.

TSMC uncovered irregularities through an internal investigation and filed a formal complaint on July 8. Authorities conducted searches and interrogations between July 25 and 28, leading to the detention of Chen Li-ming, Wu and Ko. They have remained in custody since September.

In August, prosecutors formally charged the individuals under national security and trade secrets legislation, initially seeking prison terms of up to 14 years. Additional indictments were filed in January, expanding the case to include further individuals and corporate liability.

The court stated that Chen’s actions posed risks to TSMC’s trade secrets and Taiwan’s economic security. The ruling may be appealed.