Tokyo Electron Unit Charged in TSMC 2nm Trade Secrets Case
Taiwan prosecutors escalate investigation, charging the Japanese firm's subsidiary under the National Security Act and risking its crucial relationship with the world's top chipmaker.
Taiwanese prosecutors have charged a local subsidiary of Tokyo Electron Ltd., a critical global supplier of semiconductor manufacturing equipment, in connection with the alleged theft of 2-nanometer trade secrets from Taiwan Semiconductor Manufacturing Co. (TSMC).
The move, announced Tuesday, marks a significant escalation in a case that threatens the vital relationship between the Japanese equipment giant and its largest client. According to reports from Investing.com and other local media, Tokyo Electron's Taiwan unit faces charges under the country's stringent National Security Act and Trade Secrets Act, with potential fines reaching T$120 million (approximately $3.82 million).
The charges deepen an investigation that first rattled the industry in August 2025. The case centers on a former TSMC engineer who later joined Tokyo Electron and is accused of conspiring with two current TSMC employees to steal confidential information about TSMC’s next-generation 2nm process. At the time, the news sent Tokyo Electron's shares down 3.2% in a single day, and the stock has fallen over 5.6% in the past month as investor concerns have lingered.
Prosecutors are seeking lengthy prison sentences for the individuals involved, arguing the stolen data constitutes a "national core technology" vital to Taiwan's economic and strategic interests. The case is the first to be tried under the expanded scope of the National Security Act, signaling a more aggressive stance by Taipei on protecting its dominance in the semiconductor sector.
In an official statement released in August, Tokyo Electron confirmed that a former employee of its Taiwan subsidiary was involved. The company stated it had dismissed the individual and was cooperating fully with authorities. It also noted that its internal investigation had "not confirmed any organisational involvement, such as instructions encouraging the inappropriate acquisition of information by the said former employee."
The new charges against the subsidiary itself, however, present a direct challenge to that position and raise the stakes considerably. The alleged aim of the theft was to help Tokyo Electron refine its etching equipment to better secure orders for TSMC's highly anticipated 2nm production lines, according to the Taipei Times.
For Tokyo Electron, the legal and financial penalties, while significant, may be secondary to the potential commercial fallout. The company is one of a handful of indispensable suppliers in the global chip ecosystem, and its relationship with TSMC is symbiotic. Any erosion of trust could jeopardize future sales and provide an opening for competitors like Lam Research and Applied Materials.
The 2nm node represents the next frontier in semiconductor manufacturing, promising significant gains in performance and energy efficiency for applications ranging from artificial intelligence to advanced computing. Securing a place in TSMC's 2nm production is a top priority for all major equipment suppliers.
TSMC, which initiated the investigation after detecting internal anomalies, has maintained a "zero tolerance" policy on trade secret breaches. While the company has previously stated the incident would not derail its 2nm production timeline, the legal battle now directly involving a key supplier introduces a complex new dynamic. Investors will be closely watching for any signs of strain in the relationship and the ultimate verdict from Taiwan's Intellectual Property and Commercial Court.