Taiwan Sentences Former TSMC Engineer to 10 Years in Landmark Chip Secrets Case

A Chip Secrets Case Becomes a National Security Verdict

Taiwan's Intellectual Property and Commercial Court sentenced former Taiwan Semiconductor Manufacturing Company engineer Chen Li-ming to 10 years in prison on April 27, 2026, for stealing trade secrets involving the company's advanced 2 nanometer chip manufacturing process. The ruling delivered the most severe punishment yet handed down in a Taiwanese corporate espionage case.

Tokyo Electron Taiwan, the company Chen joined after leaving TSMC, received a fine of NT$150 million, approximately US$4.6 million. The court suspended that sentence for three years, subject to the company paying NT$100 million in compensation to TSMC and NT$50 million to the national treasury.

The prosecution was the first application of Taiwan's National Security Act to intellectual property theft involving critical chip technology. It also produced the first conviction involving a corporate entity under the amended act, extending responsibility beyond the employees who obtained confidential information to the company responsible for supervising them.

Chen was convicted of violations of both the National Security Act and the Trade Secrets Act. The court found that his actions created substantial risks for TSMC's proprietary information and Taiwan's broader economic security. Three other TSMC engineers received prison sentences ranging from two to six years, while a Tokyo Electron manager received a suspended sentence for destroying evidence.

Taiwan's semiconductor sector supports global supply chains for artificial intelligence and consumer electronics. Officials have said that theft of sensitive corporate information has increased over the past decade, prompting prosecutors to seek maximum penalties as a deterrent. The case brought that concern into a concrete dispute over employee access, supplier oversight and some of TSMC's most valuable manufacturing knowledge.

How Former Colleagues Became an Information Network

Chen Li-ming previously worked in a yield engineering unit at TSMC's Fab 12 facility. Yield engineering concerns how successfully a manufacturing process produces usable chips, making information about equipment performance especially valuable to people working in that area.

After resigning from TSMC, Chen joined the marketing division of Tokyo Electron Taiwan. Its Japanese parent, Tokyo Electron, is Japan's largest semiconductor equipment manufacturer and a major supplier to TSMC. Chen's new role gave him access and a commercial incentive to seek information from his former employer.

Prosecutors described an operation that ran from the second half of 2023 through the first half of 2025. Chen used personal connections to recruit two serving TSMC engineers, Wu Ping-chun and Ko Yi-ping. Both were junior alumni from National Tsing Hua University, and those relationships helped him obtain sensitive technical data.

Wu and Ko photographed and reproduced information concerning etching equipment used in 2 nanometer production. Etching is the manufacturing step in which material is removed to form features on a chip. Information about the equipment and its settings can help a supplier understand how its machinery performs within a customer's production process.

The information was obtained to help Tokyo Electron evaluate and improve its equipment performance. The commercial goal was to strengthen its position when competing for more lucrative contracts to supply equipment for TSMC's most advanced manufacturing processes.

A Related Breach Reached Another Advanced Process

Chen Wei-chieh, a fourth TSMC employee, became involved in a separate but related breach between 2024 and 2025. He accessed company databases without authorization, photographed files concerning 14 angstrom manufacturing processes and transmitted them to Chen Li-ming.

The court sentenced Chen Wei-chieh to six years in prison. It found that he lacked remorse and had failed to obtain TSMC's forgiveness. Unlike the other defendants, he had not reached a settlement with the chipmaker.

The two sets of disclosures placed both the 2 nanometer process and files concerning 14 angstrom manufacturing within the case. For TSMC, the confidential material concerned how advanced chips are made, rather than simply the finished products that customers buy.

Why Manufacturing Details Carry Such Value

TSMC's 2 nanometer process represents the cutting edge of commercial chip production. The company has been racing against Samsung and Intel to perfect this technology for mass production, with smaller transistor features allowing more processing power to fit into less space while consuming less energy.

A nanometer is a measure used to describe extremely small dimensions in semiconductor manufacturing. The case concerned the technology used to create tiny transistor structures on silicon wafers. A transistor acts as a switch within a chip, and large numbers of these switches work together to perform computing tasks.

The stolen etching equipment specifications were part of the recipe for producing chips. That manufacturing knowledge can be as valuable as a chip design: a design describes what a chip should do, while the production process determines how to make it successfully.

Such processes involve proprietary chemical combinations, gas flows and equipment calibrations. Developing them requires billions of dollars and years of research. Disclosure to competitors or foreign entities could erode TSMC's technological advantage and shift the balance of power in the global semiconductor market.

Taiwan classifies this kind of technology as a national core key technology, reflecting the importance of advanced chip manufacturing to its economy. That classification connects the protection of confidential industrial knowledge with national security, which is why the legal consequences extended beyond a conventional dispute between an employer and former employees.

What the National Security Act Changed

Taiwan's amended National Security Act treats the theft of designated critical technologies as a matter of national sovereignty as well as a corporate offense. The legislation specifically targets the use of national core technologies outside Taiwan, recognizing the role advanced chip capabilities play in economic competitiveness and geopolitical stability.

Mona Hsieh, managing associate at Mission International Patent and Trademark Office and an attorney qualified in New York, identified three important features of the ruling. Employees face substantial prison terms, companies must demonstrate reasonable measures to keep information confidential, and employers can face liability for illegal acts committed by their staff.

Hsieh's analysis described a shift from professional consequences to severe criminal punishment. Courts also closely examine whether a company took reasonable steps to protect the information it claims as a trade secret. Confidentiality therefore depends on practical safeguards, alongside the value of the information itself.

Under the dual punishment system she described, employees and their employers can both face penalties. Employers must be able to show that they exercised due diligence, including checks on new hires and legal education for staff. The Tokyo Electron Taiwan conviction made that supervisory responsibility a central part of the case.

An Internal Evaluation Became Part of the Case

The court spokesman said that every defendant except Chen Wei-chieh confessed, and that those confessions were consistent with the evidence. At a public press conference, the spokesman also described how Tokyo Electron had assessed Chen Li-ming's work internally.

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.

The court noted that this assessment suggested an internal culture that may have encouraged the conduct leading to the convictions. The evaluation connected Chen's access to customer information with the way his employer judged his performance.

Tokyo Electron Taiwan was found to have failed to properly fulfil its corporate social responsibility in supervising employees. The court also found that its internal controls were insufficient to prevent legal violations. Those findings explain why the case resulted in a corporate penalty as well as prison sentences for individuals.

Cloud Files and the Destruction of Evidence

Investigators found TSMC trade secrets still held in Tokyo Electron's cloud storage. The material included integrated circuit manufacturing technologies below the 14 nanometer node, along with related equipment and chemical processes. The discovery directly contradicted the company's initial claim that there had been no organizational involvement.

Tokyo Electron acknowledged the seriousness of the ruling in a statement after the verdict.

We take the court's finding with the utmost seriousness.

The company said that the secrets obtained by Chen had not been disclosed to any third party. It also pledged measures to improve oversight of its information management systems.

Lu Yi-yin, a Tokyo Electron manager, received a suspended prison sentence of 10 months and a fine of NT$1 million for destroying evidence. In June 2025, she deleted image files from the company's cloud system after recognizing that they would likely become evidence in the criminal case.

The deletion was an attempt to avoid accountability for failures in oversight. Her conviction added evidence preservation to the case's concerns about unauthorized access and company supervision: once a suspected breach emerges, the handling of stored files can itself become a criminal matter.

From Internal Detection to Three Waves of Charges

TSMC's internal monitoring systems detected irregular patterns in data access. The company began a comprehensive investigation and filed a formal complaint on July 8, 2025, setting in motion a prosecution that expanded as investigators found more material and identified additional participants.

Prosecutors from the Intellectual Property Branch of the Taiwan High Prosecutors Office conducted raids and interrogations between July 25 and 28. They obtained court approval to detain Chen Li-ming, Wu and Ko incommunicado, restricting contact to prevent them from coordinating their accounts or destroying further evidence.

The principal events unfolded across several dates:

• Second half of 2023 to first half of 2025: The operation involving Chen Li-ming, Wu Ping-chun and Ko Yi-ping took place.
• 2024 to 2025: Chen Wei-chieh accessed and photographed files concerning 14 angstrom manufacturing processes.
• June 2025: Lu Yi-yin deleted image files from Tokyo Electron's cloud system.
• July 8, 2025: TSMC filed its formal complaint after an internal investigation.
• July 25 to 28, 2025: Prosecutors carried out raids and interrogations and secured detention orders.
• August 2025: The three primary engineers were indicted under the National Security Act and Trade Secrets Act.
• January 2026: Prosecutors expanded the indictment to include Chen Wei-chieh, Lu Yi-yin and additional charges against Tokyo Electron.
• April 27, 2026: The court delivered its verdict and sentences.

The prosecution proceeded in three waves. In the August indictment, prosecutors sought 14 years in prison for Chen Li-ming, nine years for Wu and seven years for Ko. Further investigation led to corporate criminal charges based on Tokyo Electron's supervisory responsibility, with prosecutors requesting NT$120 million in fines.

The January expansion followed the discovery of trade secrets remaining in company cloud storage. It added both defendants and corporate charges, broadening the case beyond the three engineers named in the first indictment.

Why the Court Imposed 10 Years Instead of 14

Presiding Judge Chang Ming-huang explained at a press conference that Chen Li-ming's full confession and cooperation in identifying accomplices were the main reasons his sentence was lighter than the 14 years prosecutors had requested.

The court also considered Tokyo Electron's settlement with TSMC and the chipmaker's willingness to forgive the damages. Chen's sentence was four years below the prosecution's request, while remaining the toughest punishment yet imposed in a Taiwanese corporate espionage case.

The corporate fine was NT$30 million higher than the NT$120 million prosecutors had requested when they brought the corporate charges. Its suspension carried concrete payment conditions: NT$100 million for TSMC and NT$50 million for the national treasury, together matching the NT$150 million penalty.

All defendants have the right to appeal. As of April 30, 2026, no appeal hearing date was given.

What the Verdict Means for Chip Suppliers

TSMC has said that it maintains a zero tolerance policy toward trade secret violations and will strengthen its internal controls to protect its technological advantage. As the world's largest contract chip manufacturer, producing advanced semiconductors for Nvidia, Apple and other technology companies, its handling of confidential information carries weight across the supply chain.

The case places supplier oversight alongside employee access controls as a security concern. Equipment makers need information to evaluate their machinery, while chip manufacturers need to protect the confidential processes that make that machinery productive. Chen's conduct crossed that boundary through personal contacts, photographs and reproduced technical data.

Companies may face higher operating expenses as they tighten cybersecurity, monitor access more closely and place more restrictive terms in contracts with partners. Those pressures are especially relevant as the industry moves toward 2 nanometer manufacturing, where process knowledge represents years of expensive development.

Taiwan's use of national security legislation also reflects a broader shift in how democratic countries protect critical industrial knowledge. Advanced semiconductor capabilities are increasingly treated as geopolitical assets as well as commercial ones. Stronger rules governing sensitive technology transfers could make collaboration across borders more complicated, even as companies continue to depend on international suppliers.

The April 27 ruling gives that shift a concrete form: severe prison terms for employees, corporate liability for inadequate supervision and financial conditions attached to a suspended company sentence. TSMC's response may also influence security expectations elsewhere in the industry.

Key Points

• Chen Li-ming received 10 years in prison on April 27, 2026, for stealing TSMC trade secrets involving 2 nanometer manufacturing.
• Three other TSMC engineers received sentences ranging from two to six years, including six years for Chen Wei-chieh.
• Tokyo Electron Taiwan received a fine of NT$150 million, approximately US$4.6 million, suspended for three years subject to specified payments.
• The payment conditions require NT$100 million in compensation to TSMC and NT$50 million to the national treasury.
• The case produced the first corporate conviction under the amended National Security Act and its first application to theft involving critical chip technology.
• Stolen material included etching equipment information for 2 nanometer production and files concerning other advanced manufacturing processes.
• Tokyo Electron manager Lu Yi-yin received a suspended sentence of 10 months and a fine of NT$1 million for destroying evidence.
• TSMC filed its complaint on July 8, 2025. All defendants retain the right to appeal.