The Verdict: A New Era of Accountability
On April 27, 2026, Taiwan’s Intellectual Property and Commercial Court delivered a ruling that sent shockwaves through the global semiconductor industry. The court sentenced former Taiwan Semiconductor Manufacturing Company engineer Chen Li-ming to 10 years in prison for stealing trade secrets related to the company’s advanced 2 nanometer chip manufacturing process. This sentence represents the most severe punishment yet handed down in a Taiwanese corporate espionage case and marks the first time authorities have applied the National Security Act to prosecute intellectual property theft involving critical chip technology.
The case has been closely watched as an indicator for how Taiwan manages the security of its semiconductor sector, which serves as the backbone of global artificial intelligence and consumer electronics supply chains. Taiwanese officials have stated that corporate theft of sensitive information has surged over the past decade, prompting prosecutors to pursue maximum penalties to deter future breaches. Chen received his sentence for violations of both the National Security Act and the Trade Secrets Act, with the court determining that his actions created substantial risks to TSMC’s proprietary information and Taiwan’s broader economic security.
Inside the Espionage Network
The investigation revealed a sophisticated web of industrial espionage that operated between the second half of 2023 and the first half of 2025. Chen Li-ming, who previously worked in a yield engineering unit at TSMC’s Fab 12 facility, joined the marketing division of Tokyo Electron Taiwan after resigning from the chipmaker. Tokyo Electron, Japan’s largest semiconductor equipment manufacturer and a major supplier to TSMC, provided Chen with access and motivation to solicit confidential information from his former employer.
Prosecutors detailed how Chen exploited personal connections to recruit two current TSMC engineers, Wu Ping-chun and Ko Yi-ping. Both men were junior alumni from National Tsing Hua University, and Chen used these relationships to obtain sensitive technical data. The stolen information specifically concerned etching equipment used in 2 nanometer production, which the engineers photographed and reproduced to help Tokyo Electron evaluate and improve its equipment performance. The goal was clear: position Tokyo Electron to secure more lucrative contracts supplying equipment for TSMC’s most advanced process nodes.
A fourth TSMC employee, Chen Wei-chieh, became involved in a separate but related breach between 2024 and 2025. Unlike the other defendants who reached settlements with TSMC, Chen Wei-chieh unauthorizedly accessed company databases to photograph files regarding 14 angstrom manufacturing processes and transmitted them to Chen Li-ming. The court handed him a six-year sentence after finding he lacked remorse and failed to secure TSMC’s forgiveness.
Why 2 Nanometer Technology Matters
To understand the severity of this case, one must grasp the significance of 2 nanometer semiconductor technology. In chip manufacturing, the nanometer measurement refers to the size of transistors etched onto silicon wafers. Smaller transistors allow more processing power to fit into less space while consuming less energy. The 2 nanometer process represents the cutting edge of commercial chip production, with TSMC racing against competitors like Samsung and Intel to perfect this technology for mass production.
The etching equipment specifications stolen in this case constitute the recipe for how chips are produced, information as valuable as the chip designs themselves. These processes involve proprietary chemical combinations, gas flows, and equipment calibrations that take billions of dollars and years of research to develop. Losing such secrets to competitors or foreign entities could erase TSMC’s technological advantage, potentially shifting the balance of power in the global semiconductor market. Taiwan’s government classifies such technology as a national core key technology, recognizing that the island’s economic survival depends on maintaining leadership in advanced chip manufacturing.
First Use of National Security Act Against Corporate Entity
This prosecution marks a watershed moment in Taiwanese legal history. It represents the first conviction involving a corporate entity under the amended National Security Act, which raises the theft of critical technologies from a corporate dispute to a matter of national sovereignty. The legislation specifically targets the extraterritorial use of national core technologies, recognizing that advanced chip capabilities have become fundamental to economic competitiveness and geopolitical stability.
Mona Hsieh, Managing Associate at Mission International Patent and Trademark Office and a New York-qualified attorney, analyzed the ruling’s significance. She noted that the case demonstrates the judiciary’s commitment to protecting high-tech trade secrets through three critical mechanisms. First, penalties have shifted from mere professional setbacks to severe criminal matters involving long-term imprisonment. Second, courts now strictly evaluate whether companies implemented reasonable confidentiality measures before granting trade secret protection. Third, under a dual punishment system, employers face liability for their employees’ illegal acts unless they can prove they exercised due diligence in vetting new hires and providing legal education.
The court spokesman emphasized that all defendants except Chen Wei-chieh confessed to their crimes, consistent with evidence on record. During a public press conference, the spokesman detailed how Chen Li-ming’s performance had been evaluated internally at Tokyo Electron.
In an internal performance evaluation report, Chen Li-ming was complemented for using existing customers’ information to assist professional judgement and access information which are difficult to acquire.
This detail highlights how Tokyo Electron’s internal culture may have encouraged the very behavior that led to criminal convictions, the court noted.
Tokyo Electron’s Corporate Liability
Beyond individual sentences, the court delivered a stern message to corporate Taiwan and international suppliers alike. Tokyo Electron Taiwan received a fine of NT$150 million (approximately US$4.6 million), with the sentence suspended for three years contingent upon payment of NT$100 million in compensation to TSMC and NT$50 million to the national treasury. The court found that the company failed to properly fulfil its corporate social responsibility in supervising its employees and lacked sufficient internal controls to prevent legal violations.
Investigators discovered that Tokyo Electron’s cloud storage still contained TSMC’s trade secrets, including integrated circuit manufacturing technologies below the 14 nanometer node and related equipment and chemical processes. This finding directly contradicted the company’s initial claims that no organizational involvement existed. In a statement following the verdict, Tokyo Electron acknowledged the severity of the situation.
We take the court’s finding with the utmost seriousness.
The company added that the trade secrets obtained by Chen had not been disclosed to any third party, and pledged measures to improve oversight of its information management systems.
Lu Yi-yin, a Tokyo Electron manager, received a 10-month suspended sentence and a fine of NT$1 million for destroying evidence. In June 2025, she deleted image files stored on the company’s cloud system after recognizing they would likely serve as evidence in the criminal case, attempting to avoid accountability for oversight failures.
From Detection to Justice
The case began unraveling when TSMC’s internal monitoring systems detected irregularities in data access patterns. The company launched a comprehensive investigation and filed a formal complaint with authorities on July 8, 2025. Prosecutors from the Intellectual Property Branch of the Taiwan High Prosecutors Office moved swiftly, conducting raids and interrogations between July 25 and 28. They obtained court approval to detain Chen Li-ming, Wu, and Ko incommunicado, preventing them from coordinating stories or destroying additional evidence.
The prosecution proceeded in three waves. In August 2025, authorities indicted the three primary engineers under the National Security Act and Trade Secrets Act, seeking prison terms of 14 years for Chen Li-ming, nine years for Wu, and seven years for Ko. As investigators dug deeper, they determined that Tokyo Electron bore supervisory responsibility for Chen’s actions, leading to additional corporate criminal charges and a request for NT$120 million in fines. By January 2026, prosecutors expanded the indictment to include Chen Wei-chieh, Lu Yi-yin, and additional charges against Tokyo Electron after discovering the remaining trade secrets in company cloud storage.
Presiding Judge Chang Ming-huang explained during a press conference that Chen Li-ming’s sentence was lighter than the 14 years prosecutors requested primarily because of his full confession and cooperation in identifying accomplices. The court also considered that Tokyo Electron had reached a settlement with TSMC, and that the chipmaker had expressed willingness to forgive the damages. However, the severity of the sentences still sets a new benchmark for intellectual property crimes in Taiwan.
Global Implications for Chip Security
This verdict signals to the global semiconductor supply chain that process-data leaks now constitute serious, system-level risks rather than mere corporate nuisances. For investors and industry observers, the case raises critical questions about vendor controls, employee access protocols, and the costs associated with preventing breaches while maintaining production efficiency. Companies may face higher operational expenses from tightened cybersecurity measures, enhanced monitoring systems, and more restrictive partner contracts, particularly as the industry pushes toward 2 nanometer manufacturing.
The ruling also suggests a broader shift in how democratic nations protect critical industrial know-how. Taiwan’s application of national security legislation to corporate trade secret theft indicates that advanced semiconductor capabilities are increasingly viewed through a geopolitical lens rather than purely commercial terms. This approach could complicate cross-border collaboration within the chip industry, even as governments worldwide harden rules around sensitive technology transfers to prevent intellectual property from walking out the door.
TSMC has stated it maintains a zero-tolerance policy toward trade secret violations and pledged to strengthen internal controls to safeguard its technological advantage. As the world’s largest contract chip manufacturer producing cutting-edge semiconductors for Nvidia, Apple, and other tech giants, TSMC’s security protocols will likely become the industry standard. The April 27 ruling serves as a stark warning to any employee or corporate entity considering compromising the integrity of Taiwan’s most valuable industrial asset.
Key Points
- Chen Li-ming, a former TSMC yield engineer, received a 10-year prison sentence for stealing 2 nanometer process trade secrets.
- Three other TSMC engineers received sentences ranging from two to six years for their roles in the espionage network.
- Tokyo Electron Taiwan was fined NT$150 million (US$4.6 million) in the first corporate conviction under Taiwan’s National Security Act.
- The case marks the first use of national security legislation to prosecute theft of national core key technologies involving chip manufacturing.
- Stolen information included proprietary data on etching equipment used in advanced semiconductor production.
- The investigation began after TSMC detected irregularities in July 2025, leading to raids and detentions later that month.
- All defendants have the right to appeal the court’s ruling.
